India Real Estate H2, 2020

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Foreword

Shishir Baijal Chairman and Managing Director

he year 2020 had reflections of both COVID-19 pandemic As we embark upon 2021, market developments in the last few associated disturbances in the beginning as well as months have enthused strong hope among market stakeholders. Tresurgence of pent-up demand in the later part of the year. With gradual unlocking of cities in Q3 2020, office occupiers and A lot happened during the year, which was hitherto unprecedented homebuyers alike reactivated their property consumption plans. and that changed the natural course of business uniquely impacting Further, in Q4 2020, as demand returned conclusively, the period the way real estate sector moved in 2020. The first half of the year recorded performance that far exceeded those achieved in the witnessed a complete standstill of activities due to the forced previous quarters of the year. Resumption of business activities and lockdown starting March 2020, followed by encouraging government improvement in sentiments with news of potential vaccines, ensured and central bank interventions at rapid intervals and tryst of the that office transaction volume for the top 8 cities grew by a massive medical fraternity for vaccine development, which holds the 271% QoQ in Q4 2020 and reached an impressive 115% of the pre- potential to bring stability. COVID-19 level (2019 quarterly average).

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This performance underscores both the latent demand in the Indian the country’s housing market to its true potential. markets and the potential impact of a timely and meaningful push by the government and central bank in a pandemic period. The With the vaccine development and easing of COVID-19 fear, there Indian office market also benefitted by the resilience of its key is a lot to look forward to in the Indian market and we expect 2021 occupier group – the Information Technology sector. Encouraged by to pan out better than the preceding one, both for the economy and the flexibility offered by landlords, occupiers conclusively made a real estate sector, with cautious optimism and a heightened level of comeback. Besides, large occupiers, confident about their long-term preparedness for socio-economic challenges, as faced in 2020. The plans, have made forward commitment for office spaces still under fundamental changes to the business milieu brought about by the construction. experiences of the pandemic will define the course of growth of our economy and the sector. Similarly, in case of the residential sector, a significant amount of latent demand came to market during the festive season in Q4 With wishes of a safe and healthy new year, we present to you 2020 and as a result, with 84% QoQ jump, housing sales reached this 14th edition of our flagship half-yearly report‘India Real an exact 100% of the pre-COVID-19 level. In case of the residential Estate’. The report captures key developments and themes for the market, latent demand was rekindled by a multi-decade low home residential and office markets of the top 8 cities1 in the country. loan interest rate and flexible price and payment terms offered by With our persistent effort to provide you a comprehensive market developers. These two catalysts ensured that the consumers enjoyed analysis, I hope you will find this report version too an insightful and the best house purchase affordability in a decade. A greater need encouraging connect with the Indian market. for home ownership was seen as people spent more time indoors on account of restricted mobility during the pandemic. This translated into strong demand for bigger and better houses. The strongest movement in demand was seen in Mumbai and Pune markets, due to a limited-period 300 basis point cut in stamp duty rate by the Maharashtra state government. We believe more stimulus measures like this are the need of the hour for other markets too to reinvigorate 1Ahmedabad, Bengaluru, Chennai, Delhi – NCR, Hyderabad, Kolkata, Mumbai, Pune,

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Contents

India - 08

2021: A year of cautious optimism - 06

Ahmedabad - 20 Bengaluru - 35 Chennai - 51 Hyderabad - 67

Government stimulus for Resilience Of Bengaluru Data Centres, the emerging asset class Integrated Township Policy, real estate in Q4 2020 - 33 Real Estate Market - 49 in Chennai - 65 Hyderabad’s experiment with urban planning - 82

Kolkata - 84 Mumbai - 101 NCR - 116 Pune - 133

Affordable housing – COVID could reverse Developers in NCR adapting to MRTS push can unlock PCMC’s the reason for joy in the City of Joy’s the trend of shrinking apartment altered consumer behavior in real estate potential - 148 realty market - 99 sizes in MMR - 114 the new normal - 131

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2021: A year of cautious optimism

Rajani Sinha Chief Economist & National Director - Research

ith the COVID infection rate in India reducing and for both Manufacturing and Services have entered the positive cities unlocking in phases, the Indian economy is on zone indicating an expansion in the economy. Some of the other Wits path to recovery. After slumping by a sharp 24% economic indicators like railway freight, petroleum consumption, in April-June 2020, the GDP contraction was relatively muted at GST collection, e-way bills collection, auto sales, cement production 7% in July-September 2020. Most economic parameters are now have also seen a rebound in the last few months, reflective of the inching closer to the pre-COVID levels and some indicators have also pick-up of growth momentum in the economy. With the economy started recording growth compared to the previous year. Index of moving towards normalcy, the displaced labour has started getting Industrial Production recorded a strong growth of 3.6% in October re-absorbed, helping to improve the employment scenario. As per 2020 (eight month high), while PMI (Purchasing Managers Index) CMIE, the monthly unemployment rate in India has dropped to 6.5%

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for November 2020, lower than the pre-COVID level of around 7%. revenue collection was also adversely impacted by the pandemic. Business sentiments have also started improving as reflected in the The Centre’s fiscal deficit is likely to surge to a high of around 7% in latest Industrial Outlook survey conducted by RBI. FY21 against the budgeted target of 3.5%, given the slump in revenue collection due to the slowdown in economy. Supportive measures from RBI and the Government have aided the economic revival. RBI has cut policy interest rates, while announcing We have started seeing substantial rebound in economic parameters various other measures for liquidity infusion, one-time loan specifically in Q3 FY21. A lot of this demand revival was supported restricting and targeted supportive measures for NBFCs, MSMEs, by the pent-up demand and festive demand. Some high frequency real estate sector and other stressed sectors. The government has economic indicators for November 2020 are showing signs of also come up with measures to aid demand revival, support stressed moderation. Hence, the critical question is how much of this growth sectors, generate employment opportunities, while also increasing momentum will be sustained in 2021. As the economy moves further budgetary allocation for capital expenditure. Additionally, the towards normalcy and people get more confident of their future government has announced measures to boost the manufacturing income stream, consumption in the economy should improve, sector and attract higher FDI, while introducing some long-pending resulting in an improvement in capacity utilization and subsequent reform measures for the labour and agriculture sector. Structural pick-up in private investment demand. The availability of COVID reforms were announced for sectors like coal mining, power vaccine in 2021 should provide a further impetus to sentiments and distribution, atomic energy, defense and aviation. These structural economic growth. RBI has projected India’s GDP growth to move reforms will have a positive impact in the medium to long-run. to positive territory in the third and fourth quarters of FY21, while projecting a GDP contraction of 7.5% for the full fiscal year. With the In the midst of all this turbulence and uncertainty, India has recorded low base of FY21, GDP growth is projected to jump up to around 9% in healthy capital inflows. FDI inflows during April-September 2020 was FY22. at a high of USD 40 billion, 11% higher than the corresponding period of previous year. FII inflows during the fiscal year so far (till 28th 2020 was an unprecedented year that saw huge demand destruction, December 2020) has been USD 27.5 billion compared to an outflow of instability and uncertainties due to the COVID pandemic. We are USD 3 billion during the previous fiscal year. Strong capital inflows beginning 2021 with lingering uncertainties around the pandemic. have helped push India’s forex reserves to a high of ~ USD 580 billion. Going by the experience of some of the other countries, there is This is a comforting factor in the current times of volatility and a threat of further waves of COVID infection. However, with the uncertainty. infection rate in India reducing and the vaccine around the corner, the worst seems to be behind us. 2021 will be a year of cautious In order to support growth, the RBI has cut repo rate by 115 bps in optimism and rebound in business and economic activities. 2020. However, a further cut in policy interest rate in the near-term is unlikely given the inflationary pressure in the economy. Even with weak demand, CPI inflation in the economy has remained above RBI’s comfort zone (2%-6%) for the last 11 months. While the inflationary pressure was initially due to supply side bottlenecks and mainly in food inflation, core inflation also inched up in the last few months. With supply bottlenecks easing and Kharif harvest coming into the market, RBI expects inflation to ease to sub-6% in Q4 FY21.

Further meaningful fiscal stimulus looks difficult given the pressure on Government’s finances. The government’s Gross tax revenue collection has fallen by a sharp 17% in April-October 2020. Non-tax

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INDIA

RESIDENTIAL AND OFFICE MARKET

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India Residential Market

INDIA MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 CHANGE (YOY) H2 2020 Q4 2020 CHANGE (YOY) CHANGE (QOQ)

Launches 146,628 -34% 86,139 -23% 55,033 77% (housing units)

Sales 154,434 -37% 94,997 -19% 61,593 84% (housing units)

Unsold inventory 437,920 -2% - - - - (housing units)*

Quarters to sell* 10.1 - - - - -

Age of unsold inventory 16.7 - - - - - (in quarters)*

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number. Unsold inventory, QTS and Age of Inventory are end of period parameters and the same for 2020, H2 2020 and Q4 2020.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Sales (housing units) 49,905 9,632 33,403 61,593

Sales as % of 2019 Quarterly average 81% 16% 54% 100%

Launches (housing units) 54,905 5,584 31,106 55,033

Launches as % of 2019 Quarterly average 98% 10% 56% 99%

Source: Knight Frank Research

• At the end of 2019, the residential market was already battling afforded potential homebuyers an opportunity to delay their lacklustre sales, stagnating prices, falling investor demand and decision while hunting for better bargains. large unsold inventories across markets. With the RBI having tightened lending norms to the real estate sector and customer • While developers were grappling with the liquidity crisis and advances being prohibited by RERA, NBFCs had become a major slack demand scenario, they had also been increasingly aligning source of funding for real estate developers over the course of themselves to the needs of homebuyers by reducing ticket-sizes this decade. However, the NBFC crisis at the end of 2018 left the and unit-sizes in a bid to encourage sales. This market aligned industry with very few options, as investor demand had reduced strategy coupled with a much more transparent regulatory dramatically in the past few years and the stagnating prices environment effected by the RERA authority had prevented

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homebuyer sentiments from declining and led to a steadying, if flexibility depending on the city of residence and company they not an increase, in sales numbers, since H1 2018. worked for. However, the homebuyer’s increasing need for the provision of a quiet and ergonomic working environment at home • Just as it seemed like the residential market was finding its has been a factor observed by developers during H2 2020. footing, the COVID-19 pandemic nearly stalled the market by the end of H1 2020 and the subsequent economic fallout was • Buyers were more inclined to look for larger apartments while expected to keep the market similarly subdued for the rest of the upgrading from current accommodations. This was increasingly year. However, contrary to majority sentiment at the time, the true for first-time buyers as well and this reflected in the fact market has in fact clawed its way back from the lows seen in Q2 that apartments priced over INR 5 mn had a larger share of sales 2020. Sales volumes during Q2 2020 had plummeted to just 16% at 57% compared to apartments priced under INR 5 mn at 43% of the average quarterly sales observed in 2019. This number saw during H2 2020. a steep recovery to 54% during Q3 2020 and reached exactly 100% of the pre-COVID-19 level (2019 quarterly average) in Q4 2020. • Weighted average residential prices have fallen significantly across markets in H2 2020 as developers did their best to push • The resumption of economic activity, reducing likelihood of sales. Prices fell the most in Chennai at 9% YoY followed by Pune further stringent lockdowns and the increasing chances of and NCR at 5% and 4%, respectively. Developers’ continued focus the availability of a viable vaccine in 2021 allayed some of the on liquidating existing inventory pushed down unsold inventory fears associated with the pandemic. Developers also pursued volumes for the sixth consecutive year to 437,920 units at the end aggressive sales strategies by being extremely flexible on prices of 2020, down 2% from 2019. and payment terms by allowing refundable deposits (on booking) and facilitating homebuyer financing to tide over the ongoing • The year 2020 proved to be a lot more resilient than most crisis. There was a significant amount of latent demand that stakeholders had expected. Low home loan rates, regulatory came to market during the festive season in Q4 2020 and in fact interventions such as the further relaxations in RERA completion exceeded even the sales volumes seen in Q4 2019 by 5%. The six- deadlines and more aggressive measures such as the stamp duty month moratorium on term loans till the end of August 2020 and cut by the Maharashtra government will help the market survive a similar extension on RERA completion dates for all registered and sustain this difficult period. The near-term outlook on sales projects, also helped alleviate some of the pressure on developers remains cautiously optimistic, as buyers increasingly hunt for and help them focus on sales. good deals in the backdrop of a slowly stabilising economic environment. • Sales momentum has been particularly strong in the Mumbai and Pune markets, where sales in Q4 2020 exceeded their 2019 quarterly average by a comparatively vast margin of 46% and 47%, respectively. This strength in sales can be attributed to a large extent to a limited-period 300 basis points cut in stamp duty that the Maharashtra state government introduced in Q3 2020.

• Construction activity had also been similarly crippled during Q2 2020 due to the lockdown and the sheer exodus of construction workers from the cities to their hometowns. However, workers started returning to the cities from Q3 2020 as construction sites were allowed to resume operations. As a result, new supply volumes also experienced a similar trajectory as sales with new launch volumes in Q4 2020, finishing just shy of 2019 average quarterly volumes at 99%.

• The COVID-19 pandemic has brought about a fresh appreciation for the need for more personal space. The pandemic forced employees to work from home during the lockdown and the practice has continued over the year with varying degrees of

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Knight Frank Affordability Index

Affordability has improved over the years across all markets with income growing and housing prices correcting. The Knight Frank Affordability Index, that tracks the EMI (Equated Monthly Instalment) to income ratio for households, fell further in 2020 across all cities. In fact, affordability has improved dramatically since 2015 as the combined impact of slowing price growth and falling interest rates was much greater in this period. Not only have housing prices reduced further in 2020, the home loan interest rate is at a decadal low, aiding housing affordability. For instance, in Ahmedabad, the affordability index has improved to 24% in 2020 from 46% in 2010. This implies that on an average a household in Ahmedabad needs to spend 24% of its income to pay EMI for housing loan. Mumbai remains the most expensive market, but even in Mumbai the affordability has improved by 32 percentage points since 2010. Mumbai is the only market with an EMI to income ratio above 50%, a level beyond which banks rarely underwrite a mortgage. Ahmedabad is India’s most affordable market today followed by Pune and Chennai, with affordability ratio at 26% for both the cities. For NCR and Bengaluru, the affordability ratio is at 38% and 28%, respectively in 2020.

AFFORDABILITY MATRIX

EMI to Income Ratio

City 2010 2015 2020

Mumbai 93% 94% 61% NCR 53% 51% 38% Bengaluru 48% 48% 28% Pune 39% 38% 26% Chennai 51% 43% 26% Hyderabad 47% 39% 31% Note: City-wide average affordability statistics are useful but they cannot Kolkata 45% 44% 30% highlight disparities in housing costs within sub-markets or across the income spectrum Ahmedabad 46% 36% 24% Source: Knight Frank Research

Methodology

The Knight Frank Affordability Index indicates the proportion of income that a household requires, to fund the monthly instalment (EMI) of a housing unit in a particular city. So, a Knight Frank Affordability index level of 40% for a city implies that on an average, households in that city need to spend 40% of their income to fund the EMI of housing loan for that unit. An EMI/ Income ratio over 50% is considered unaffordable as it is the limit beyond which banks rarely underwrite a mortgage Assumptions • EMI, housing unit size and price/ sq ft represent city-level averages. • EMI: Loan Tenure – 20 years Loan to Value – 80% Home loan interest rate - Average home loan rates of the State Bank of India (SBI) • Area of housing unit: House size is fixed for each city across the years, but varies within different cities taking into account the average size preference for each city. • Housing Price: Median housing price for that city

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INDIA RESIDENTIAL MARKET

Launches Sales

1,50,000

1,20,000

90,000 No. of units No.

60,000

30,000

0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

INDIA AFFORDABLE MARKET ACTIVITY (UPTO INR 5 million segment)

70,000

60,000

50,000

40,000 No. of units No. 30,000

Sales volumes during Q2 20,000 2020 had plummeted to 10,000 Source: Knight Frank Research

just 16% of the average 0 quarterly sales observed H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 in 2019. This number saw a steep recovery to TICKET SIZE SPLIT OF SALES 54% during Q3 2020 and reached exactly 100% of <5 mn >5 mn the pre-COVID-19 level H2 2020 57% 43% (2019 quarterly average) H2 2019 49% in Q4 2020 51%

Source: Knight Frank Research

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Residential Launches and Sales

Launches Sales % Change (housing units) (housing units) (YOY)

NCR

8,402 -44% 9,824 -57%

15,788 -31% 2020 21,234 -50% H2 2020

Ahmedabad Kolkata

4,745 -41% 7,372 -36% 3,290 -35% 4,148 -27%

3,986 -53% 2020 6,506 -61% 5,975 -11% 2020 8,912 -21% H2 2020 H2 2020

Mumbai

26,904 -25% 50,303 -37% Hyderabad

30,042 10% 2020 48,688 -20% H2 2020 8,404 4% 12,826 -5%

5,260 -34% 2020 10,042 -38% H2 2020

Pune Chennai 21,557 -7% 34,992 -22% 3,714 -2% 7,234 -37% 16,870 9% 2020 26,919 -18% H2 2020

5,673 -29% 2020 8,654 -49% H2 2020

Bengaluru

9,123 -29% 19,929 -41%

11,402 -43% 2020 23,579 -51% H2 2020

Source: Knight Frank Research All maps are for representational purpose not to scale

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Residential Unsold Inventory

Unsold inventory QTS Age of inventory (housing units), YoY Change (in quarters) (in quarters)

NCR

110,674 13.8

-9% 23.5 H2 2020

Ahmedabad Kolkata

10,494 3.6 28,160 11.2

9% 10.1 -14% 15.2 H2 2020 H2 2020

Mumbai

146,916 10.7 Hyderabad 1% 14.6 H2 2020 7,180 2.2

63% 11.5 H2 2020

Pune Chennai 47,542 6.4 3.8 20% 13.5 12,190 H2 2020 -10% 15.5 H2 2020

Bengaluru

74,764 8.3

-5% 15.0 H2 2020

Source: Knight Frank Research All maps are for representational purpose not to scale

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India Office Market

INDIA MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

Completions 3.3 (35.5) -42% 1.59 (17.2) -54% 0.93 (10.0) 41% mn sq m(mn sq ft)

Transactions 3.66 (39.4) -35% 2.06 (22.2) -33% 1.63 (17.5) 271% mn sq m (mn sq ft)

Stock mn sq m (mn sq ft)* 73.5 (791.7) 5% - - - -

Vacancy (%)* 15.50% - - - - -

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number. Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Transactions mn sq m (mn sq ft) 1.4 (14.6) 0.2 (2.6) 0.4 (4.7) 1.6 (17.5)

Transactions as % of 2019 Quarterly average 96% 17% 31% 115%

New completions mn sq m (mn sq ft) 1.2 (13.2) 0.5 (5.2) 0.7 (7.1) 0.9 (10)

New Completions as % of 2019 Quarterly 86% 34% 47% 65% average

Source: Knight Frank Research

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• 2019 was a year of record highs for the Indian office space market forward commitments for office spaces still under construction. as transactions grew at a decade high of 27% and crossed 5.6 Almost 33% of the total space transacted in Bengaluru during the mn sq m (60 mn sq ft) during the year. The supply crunch that period was pre-committed by the likes of global technology giants plagued the market in preceding years had also alleviated, with such as Google and Amazon. new completions also growing at a decade high of 61% to exceed annual transactions for the first time since 2013. The Embassy • Even during this pandemic, rents have remained stable in Benga- Office Parks REIT, India’s first, had listed in April 2019 and de- luru, Chennai and Hyderabad in 2020 (YoY basis). However, rents livered 50% returns before the end of the year, underscoring the have declined by approximately 6% YoY in Mumbai and Pune and bullish trend in the office space market. 2019 ended on a cautious- by 7% YoY in Kolkata. The sectoral share of transactions has re- ly positive note in the backdrop of a slowing economy where the mained comparatively intact for the Banking, Financial Services substantial supply expected to come online in subsequent periods and Insurance (BFSI) and Information Technology sectors during was sufficient to satiate growing demand but could put rental H2 2020. A significant 33% of the area transacted by BFSI sector growth under pressure. companies occurred in Hyderabad, while Bengaluru accounted for the highest share of the transactions executed by Information • However, the near stoppage of business activity across all markets Technology, manufacturing and co-working sector companies at because of COVID-19 during Q2 2020 and its phased resumption 35%, 39% and 45%, respectively. The transactions claimed by the in a weak economic environment weighed heavily on occupier Other Services sector and co-working companies fell marginally demand in 2020. Transactions fell 35% YoY to a six-year low of 3.7 in H2 2020 compared to the previous period. mn sq m (39.4 mn sq ft) in 2020, while new completions dropped 42% YoY. • The year 2020 saw occupiers adapting to the pandemic induced restrictions by being much more flexible about their need for • However, transactions have gathered momentum toward the end location, normal work hours and their need for physical interac- of the year as business activity resumed and sentiments improved tions. However, with definite visibility of a viable vaccine being with news of at least four potential vaccines inundating popular made available next year, occupiers have again begun scouting for media. Transaction volume for the eight cities under review grew expansion opportunities, as evidenced by the strong transaction by a massive 271% Quarter-on-Quarter (QoQ) in Q4 2020 and has activity in Q4 2020. reached an impressive 115% of the pre-COVID-19 level (2019 quarterly average). • We believe that while the events in 2020 will probably hasten the evolution of the office space into a more flexible and wellness-ori- • Without exception, all markets experienced a resurgence in QoQ ented environment in the long run, it is unlikely that the need transaction volumes during Q4 2020. Among the Information for a traditional office space will reduce in the foreseeable future. Technology sector dominated markets; Bengaluru, Hyderabad, The intensity of the pandemic and the time required to make its Pune and Chennai saw an unprecedented spike in QoQ transacted vaccine available to the masses will determine the trajectory of volumes during Q4 2020 at 459%, 640%, 919% and 227%, respec- economic growth, as well as office space demand in 2021. tively.

• Of the total transacted volumes of 1.63 mn sq m (17.5 mn sq ft) in Q4, a significant 24% (4.2 mn sq ft) was contributed by pre-commitments to Built-to-Suit and under-construction properties. This shows that with the economy moving toward normalcy, the businesses have re-initiated their expansion plans.

• With transaction volumes growing at 8% YoY, the Bengaluru office market accounted for over a third of the total transactions (Top 8 cities) during H2 2020 and was the only market to register growth on a YoY basis. Large occupiers in Bengaluru have been particularly confident about their long-term plans and have made

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INDIA OFFICE MARKET

Completions Transactions

4.0

3.5 Transaction volume for 3.0 the eight cities under 2.5 review grew by a massive

2.0 271% Quarter-on-Quarter (QoQ) in Q4 2020 and has 1.5 mn sq m reached an impressive

1.0 115% of the pre-COVID-19 level (2019 quarterly 0.5 average). 0.0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

INDIA OFFICE MARKET VACANCY

Vacancy

18% 16% 14% 12% 10% 8% 6% 4% 2% 0% H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

SECTOR-WISE SPLIT OF TRANSACTIONS

H2 2019 H2 2020

16% BFSI 16%

41% Information Technology 41%

12% Manufacturing 15%

10% Co-working 10%

22% Other Services 18%

Note: BFSI includes BFSI support services Source: Knight Frank Research

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Office Transactions

H2 2020 Transactions 2020 Transactions mn sq m (mn sq ft), YoY Change mn sq m (mn sq ft), YoY Change

NCR

0.2 (2.6) 0.4 (4.5)

(-46%) 2020 (-46%) H2 2020

Ahmedabad

0.1 (0.8) 0.1 (1.3) Kolkata

-15% 2020 -15% 0.04 (0.4) 0.1 (0.9) H2 2020

-38% 2020 -32% H2 2020

Mumbai

0.2 (2.1) 0.6 (6.0) Hyderabad

(-58%) 2020 (-38%)

H2 2020 0.4 (3.8) 0.6 (6.0)

-58% 2020 -53% H2 2020

Pune

0.2 (1.7) 0.3 (3.7) Chennai

-30% 2020 -40% H2 2020 0.3 (3.2) 0.4 (4.5)

-5% 2020 -13% Bengaluru H2 2020

0.7 (7.5) 1.1 (12.3

8% 2020 -19% H2 2020

Source: Knight Frank Research All maps are for representational purpose not to scale

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Office Rental

Rental value in H2 2020 in 12-month 6-month INR/sq m/month (INR/sq ft/month) change change

NCR

885 -4.4% 4.8% (82.2)

Ahmedabad Kolkata 442 -4.5% -2.6% (41.1) 385 -6.8% -7.3% (35.8)

Mumbai

1,246 -5.6% -3.5% Hyderabad (116) 658 0.2% -1.4% (61.1)

Pune

753 Chennai -6.0% -6.0% (70) 645 0.1% -1.3% (59.9) Bengaluru

861 0% -4.8% (80)

Source: Knight Frank Research All maps are for representational purpose not to scale

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AHMEDABAD RESIDENTIAL AND OFFICE MARKET

2020 INDIA REALINDIA ESTATE REAL ESTATE- AHMEDABAD

Balbirsingh Khalsa National Director Industrial & Logistics and Branch Director - Ahmedabad

he COVID crisis hit us at a time when the Indian economy eastern and western periphery of the city. Due to the emergence of an was already slowing down. The GDP growth of 4.1% recorded alternate business district and increasing office space consumption Tin Q3 2020 was the lowest in a decade. The pillars of India’s near SG Highway, nearby locations such as South Bopal, Shela and growth i.e. consumption, investment and exports were all slowing Thaltej have become strategically important in the western quadrant down. Subsequent disruptions in the economy caused by the pan- of the city for continued residential development. demic-imposed lockdown and a complete shutdown of all activity in the real estate industry ensured that sales plummeted to near incon- The office market has been more adversely impacted by the pan- sequential levels in Q2 2020. demic compared to the residential market, as occupiers have largely refrained from taking up space since March due to the bleak business Residential demand in Ahmedabad has been adversely impacted environment. Significant supply additions in the recent past along by the loss of livelihood and the threat on potential income disrup- with flagging demand have kept rents and vacancy levels under tion, despite being one of the most affordable markets among the pressure. However, the last quarter of 2020 has been encouraging for top eight cities. Post unlocking on 18th May 2020, adjustment to the the office market as occupier interest has started showing signs of ‘new normal’ and the lack of availability of workers, did not allow the improvement. market to recover quickly. Construction activities started picking up from July to mid-August with local construction workers and some migrant workers returning from their villages.

Demand has started to pick up since the festive season, as some latent demand came back to the market and developers are more open to negotiate. Factors like low home loan interest rates and increase in the maximum area for affordable housing units from 80 to 90 sq mt (BUA) have helped improve sentiments. New launches continue to be curtailed in general, except in the lower ticket sizes toward the

2121 INDIA REAL ESTATE - AHMEDABAD INDIA REAL ESTATE - AHMEDABAD

Ahmedabad Residential Market

AHMEDABAD MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

Launches 7,372 -36% 4,745 -41% 3,294 127% (housing units)

Sales 6,506 -61% 3,986 -53% 2,810 139% (housing units)

Price 30,215/sq m -3.10% - - - - (wt avg)* (2,807/sq ft)

Unsold inventory 10,494 9% - - - - (housing units)*

Quarters to sell* 3.6 - - - - -

Age of unsold inventory 10.1 - - - - - (in quarters)*

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Sales (housing units) 2,268 252 1,176 2,810

Sales as % of 2019 Quarterly average 54% 6% 28% 67%

Launches (housing units) 2102 525 1451 3294

Launches as % of 2019 Quarterly average 73% 18% 51% 115%

Source: Knight Frank Research

• Priced the lowest among the eight cities under coverage, Ahmed- opment Permission System (ODPS) for granting building permis- abad is among the most affordable residential real estate markets sions to real estate developers, while the funding crisis intensified in India. Residential prices here have changed very little com- in 2019. The COVID-19 pandemic that struck in full force during pared to the other markets, while the cost of land has risen much Q2 2020 has only exacerbated an already dire situation. more in proportion to the end-product prices. This has made the business of residential development increasingly difficult as • Sales had just started showing some signs of strength at the end of margins have gotten progressively thinner over the decade. The last year with H2 2019 experiencing the highest half yearly sales industry had just come to terms with the sweeping regulatory since H2 2016 and the market seemed to be on the recovery path. changes of RERA, GST and the state government’s Online Devel- However, the pandemic-induced lockdown forced sales, as well as

22 INDIA REAL ESTATE - AHMEDABAD

new launches, to hit a historic low in H1 2020 with few stakehold- • The unsold inventory level has fallen almost 67% since 2017, as ers optimistic about a meaningful recovery in the short term. developers have made a conscious effort to reduce existing inventory. This has caused the Quarters to Sell (QTS) level to also fall in • The resumption of business activity in June 2020 along with tandem with steady sales and falling unsold inventory levels from innovative strategies by developers such as conducting virtu- 7.7 in H1 2017 to 3.6 quarters in H2 2020. al site visits, aggressive homebuyer financing, price cuts and allowing refundable deposits on booking, have kept homebuyers • Ahmedabad has a very price-sensitive market, as evidenced by in play during the second half of the year. While sales have still the price movements in this decade, and the pandemic has forced fallen steeply by 53% YoY in H2 2020, it is heartening to note that developers to negotiate hard on pricing and payment terms to volume growth has been encouraging in Q3 and Q4 2020. Q4 2020 push sales during the year. This has caused the average price level has shown a sequential growth of 139% over the preceding quar- to drop 3% YoY in H2 2020. ter, compared to the 84% growth seen in all the eight cities during the same period. If not for an abrupt rise in COVID-19 infections • The Gujarat government took some measures during Q4 2020 to toward the end of Q4 2020, sales volumes could have been signifi- support the sector such as increasing the maximum carpet area cantly higher. limit for affordable housing from 80 sq m to 90 sq m and enabling the purchase of agricultural land for affordable housing develop- • The under INR 5 mn ticket size, which has always seen the most ment. While these steps are beneficial for upcoming projects and demand in Ahmedabad, claimed 69% of sales in H2 2020 as well. will have an impact over the longer term, it is unlikely that they The INR 2.5–INR 5 mn sub-segment made up 43% of the total will affect the immediate concerns of the sector. More aggressive sales, while properties sold in the ticket size under INR 2.5 mn steps such as the temporary stamp duty cut in Maharashtra are constituted approximately 26% of the same. probably the need of hour today.

• 34% of total sales in H2 2020 occurred in the North zone. Loca- tions such as Nana Chiloda, New Ranip, Gota and Chandkheda, which have a high concentration of affordable projects, fared well in terms of attracting end users largely comprising the blue-collared working population. 24% of the sales during the period were booked in western micro-markets such as South Bopal, Shela, Shilaj and Thaltej and Science City Road due to rapidly developing social infrastructure and improved road connectivity.

• The scarcity of labour, adverse liquidity environment and weakening homebuyer sentiment weighed heavily on residential supply as well with volumes falling 41% YoY to 4,745 units in H2 2020. 66% of the launches occurred in the ticket sizes under INR 5 mn, and the INR 2.5–INR 5 mn ticket size saw 44% of the total launches in H2 2020. 23% of the units were launched in the INR 5–INR 7.5 mn ticket size, while 5% were launched between INR 7.5–INR 10 mn.

• The western quadrant of the city continues to gain prominence due to the proliferation of office projects along the SG Highway; this has vastly improved the prospects of nearby residential locations such as South Bopal, Shela and Thaltej. Smooth connectivity to the commercial hubs of Central Business District – West (CBD West) and numerous infrastructure upgrades along the SG Highway have led to intensified new residential construction in these locations.

23 INDIA REAL ESTATE - AHMEDABAD INDIA REAL ESTATE - AHMEDABAD

AHMEDABAD RESIDENTIAL MARKET

Launches Sales Wt avg price (INR/sq m)

10000 31500

31000 % 8000 30500 53Drop in units sold during H2 2020

6000 m INR/sq

compared to H2 2019 No of units

30000

4000

29500

2000 29000

0 28500 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

AHMEDABAD AFFORDABLE MARKET ACTIVITY (UPTO INR 5 million segment)

7,000

6,000

5,000

4,000 Sales volume in Q4 2020 has grown 139% 3,000 No of units compared to the 2,000 preceding quarter. This 1,000 Source: Knight Frank Research is much greater than the 0 84% growth seen in all H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 the eight cities during the same period.

TICKET SIZE SPLIT OF SALES

<5 mn >5 mn

H2 2020 31% 69%

H2 2019 27% 73%

Source: Knight Frank Research

24 DABHODA GANPATPURA JAMIATPURA

SHANTIGRAM INDIA REAL ESTATE - AHMEDABAD

PORE RAYSAN

ADALAJ VADODARA KAROLI JASPUR VADSAR PIROJPUR

KHORAJ AMBAPUR DANTALI Residential VALAD

KHODIYAR THOL Launches and Sales LILAPUR

KHATRAJ ZUNDAL KARAI Launches Sales % Change THOL (housingLAPKAMAN units) (housing units) (YOY) North TRAGAD LIMBADIA 1,716 10% AMIYAPUR2,662 -5%

SUGHAD

SANAWAD 2020 1,345 -50% 2,253 -58% MEDRA H2 2020

CHANDKHEDA

ADHANA NASMED NIGAM NAGAR KOTARPUR RAIPUR RAKANPUR OGNAJ RANASAN

SANTEJA

BHAT GOTA ENASAN

VAYANA GIDC NARODA

NOBLE NAGAR East CHANDLODIA SABARMATI HANSOL BILASIYA 746 -56% 1,219 -46% VAHELAL UNALI

793 -62% 2020 1,247 -69%

VIJAY NAGAR H2 2020 CHANAKYAPURI

RANCHARDA NAVA NARODA SOLA VILLAGE CHEKHLA

MEGHANI NARANPURA NAGAR PALODIA MEMNAGAR KRISHNANAGAR

THALTEJ DUBESHWAR

KATHWADA NIKOL NAVRANGPUR

MANIPUR BODAKDEV BOPAL BAPUNAGAR SHAHPUR KUBADTHAL GHUMA Central ODHAV BHUVALDI INDUSTRIAL GIDC ESTATE 546 -57 861 -32% INDUSTRIAL GODHAVI SPRING VALLEY ODHAV KHADIA AREA NIYOJAN NAGAR

565 -49% 2020 792 -44% H2 2020

SHERKOTDA KANBHA BAGODARA West

SHELA 1,418 -49% 2,207 -47% KANETI KUJAD VASNA VEJALPUR-2 976 -55% 2020 1,732 -60% AMRAIWADI H2 2020 MAHADEV

MAKARABA JUHAPURA NAGAR

RAMOL SARKHEJ GAM ISANPUR MEMADPUR SANAND

MICRO-MARKET CLASSIFICATIONCHALODA BHAVDA GIDC BAKROL BURNI SINGARVA VATVA Micro market Locations GERATNAGAR SANATHAL VATVA

PIPLAJ South Central Paldi, Vasna, Navrangpura, Maninagar, Dudheshwar,NAROLGAM Ambawadi KOLAT -58% -57% 319 VINZOL424 UNDREL DHAMATVANA

East VANZARNaroda, Vastral, Nikol, Kathwada Road, Odhav 306 -40% 2020 483 -70% H2 2020

VANCH PIPAN North Gota, New Ranip, Tragad, Chandkheda, MoteraLAXMIPUR HATHIJAN

SouthVISALPUR Narol, Vatva, Vinzol, Hathijan BADODRA

MORAIYA HIRAPUR

West SG. Highway, Prahlad Nagar, Bopal, Thaltej, Science City RoadASLALI CHANGADAR GAMDI

NANDEJ

TAJPUR Source: Knight Frank Research DEVDI All maps are for representational purpose not to scale JINJAR

RASKA MODASAR CHOSAR

SARI KASINDRA 25 BAREJADI JETALPUR

MATODA GIRAMTHA DABHODA GANPATPURA JAMIATPURA

SHANTIGRAM INDIA REAL ESTATE - AHMEDABAD INDIA REAL ESTATE - AHMEDABAD

PORE RAYSAN

ADALAJ VADODARA KAROLI JASPUR VADSAR PIROJPUR

KHORAJ AMBAPUR DANTALI Residential VALAD

KHODIYAR THOL Unsold Inventory LILAPUR

KHATRAJ ZUNDAL KARAI Unsold inventory (housing QTS Age of inventory THOL units),LAPKAMAN YoY change (in quarters) (in quarters) North TRAGAD LIMBADIA 1,314 1.4 AMIYAPUR

SANAWAD 45% 8.3 SUGHAD

H2 2020 MEDRA

CHANDKHEDA

ADHANA NASMED NIGAM NAGAR KOTARPUR RAIPUR RAKANPUR OGNAJ RANASAN

SANTEJA

BHAT GOTA ENASAN

VAYANA GIDC NARODA

NOBLE NAGAR CHANDLODIA SABARMATI HANSOL BILASIYA

VAHELAL UNALI VIJAY NAGAR East CHANAKYAPURI

RANCHARDA 1,608NAVA NARODA2.4 SOLA VILLAGE CHEKHLA -2% 11.8 H2 2020 MEGHANI NARANPURA NAGAR PALODIA MEMNAGAR KRISHNANAGAR

THALTEJ DUBESHWAR

KATHWADA NIKOL NAVRANGPUR

MANIPUR BODAKDEV BOPAL BAPUNAGAR SHAHPUR KUBADTHAL GHUMA ODHAV BHUVALDI INDUSTRIAL Central GIDC ESTATE INDUSTRIAL GODHAVI SPRING VALLEY ODHAV KHADIA AREA NIYOJAN NAGAR 1,949 7.1

4% 8.9 H2 2020 SHERKOTDA KANBHA BAGODARA

SHELA West KANETI KUJAD VASNA VEJALPUR-2 3,608 4.8 AMRAIWADI MAHADEV 15% 9.1 H2 2020 MAKARABA JUHAPURA NAGAR

RAMOL SARKHEJ GAM ISANPUR MEMADPUR SANAND

CHALODA BHAVDA GIDC BAKROL BURNI SINGARVA VATVA GERATNAGAR SANATHAL VATVA

PIPLAJ

NAROLGAM South KOLAT VINZOL 2,016 7.8 UNDREL DHAMATVANA VANZAR -3% 14.3 H2 2020

VANCH PIPAN LAXMIPUR HATHIJAN

VISALPUR BADODRA

MORAIYA HIRAPUR

ASLALI CHANGADAR GAMDI

NANDEJ

TAJPUR Source: Knight Frank Research DEVDI All maps are for representational purpose not to scale JINJAR

RASKA MODASAR CHOSAR

SARI KASINDRA 26 BAREJADI JETALPUR

MATODA GIRAMTHA INDIA REAL ESTATE - AHMEDABAD

Residential Pricing

Price range in H2 2020 6 month Micro Market Location 12 month Change in INR/sq m (INR/sq ft) Change

63,500-68,900 Ambavadi -2% -1% (5,900-6,400) Central 53,800-64,600 Navrangapur -3% -2% (5,000-6,000

16,100-30,700 Nikol -2% -1% (1,500-2,850) East 19,400-26,900 Vastral -3% -2% (1,800-2,500)

25,800-36,600 Chandkheda -2% -1% (2,400-3,400) North 32,300-45,200 Motera -3% -2% (3,000-4,200)

12,900-16,100 Aslali Circle -3% -2% (1,200-1,500) South 10,800-21,500 Vatwa -2% -1% (1,000-2,000)

34,400-36,600 Bopal -4% -1% (3,200-3,400) West 59,200-61,300 Prahlad Nagar -4% -1% (5,500-5,700)

Source: Knight Frank Research

27 INDIA REAL ESTATE - AHMEDABAD INDIA REAL ESTATE - AHMEDABAD

Ahmedabad Office Market

AHMEDABAD MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

New completions 0.48 (5.1) 4.90% 0.23 (2.52) 12.9% 0.09 (1.0) -34% mn sq m(mn sq ft)

Transactions 0.12 (1.3) -15.1% 0.08 (0.82) -14.5% 0.07 (0.8) 1174% mn sq m (mn sq ft)

Weighted average transacted rental INR/sq 442 (41) -4.50% - - - - m/month (INR/sq ft/month)*

Stock mn sq m (mn sq ft)* 2.93 (31.54) 19% - - - -

Vacancy (%)* 45.20% - - - - -

Note – 1 square metre (sq m) = 10.764 square feet (sq ft), *End of period number. Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Transactions mn sq m (mn sq ft) 0.05 (0.5) - (-) 0.01 (0.1) 0.07 (0.8)

Transactions as % of 2019 Quarterly average 127% 0% 15% 197%

New completions mn sq m (mn sq ft) 0.24 (2.6) -(-) 0.14 (1.5) 0.09 (1.0)

New Completions as % of 2019 Quarterly 213% 0% 125% 82% average

Source: Knight Frank Research

• Ahmedabad is the smallest of the eight office markets under cov- • Cognizant of the changing investment appetites and steady office erage and constitutes just under 4% of their total stock. It also has space demand, developers added nearly 70% incremental office a relatively shallow lease market with sale transactions constitut- space to the Ahmedabad market between H2 2016 and H2 2019. ing a higher share of primary market activity compared to most While this led to an increase in transaction activity that was close other markets. Traditional office space buyers in Ahmedabad to 0.1 mn sq m (1 mn sq ft) during H2 2019, the vacancy level also typically view it as an investment play in the potential economic rose sharply to 35.9% at that time. The COVID-19 induced lock- growth story of Ahmedabad and as a more attractive investment downs put further pressure on office transactions during H1 2020, opportunity compared to the residential segment which has not but new completions continued at a growing rate as a bulk of the delivered meaningful capital appreciation during this decade. construction workers returned by the end of September 2020.

28 INDIA REAL ESTATE - AHMEDABAD

This caused new office completions to rise 13% YoY during H2 2020 and 5% YoY for the AHMEDABAD OFFICE MARKET year 2020.

Completion Transactions

• Of the 2.5 mn sq ft of office space completed 0.30 during H2 2020, close to 90% was located on CBD West locations such as Sindhu Bha- 0.25 van Road and Science City Road. Satyamev Eminence, Sankalp Square 3, One World West and Epitome were among the largest 0.20 projects that attained completion during

this period. 0.15

• 2020 has unarguably been the most volatile mn sq m 0.10 year on record due to the abrupt stoppage of all business activity in the first half of the year. Transaction activity was severely 0.05 curtailed due to the pandemic and resulted

in near negligible volumes during Q2 2020. 0.00 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 There was a vast amount of uncertainty about how office market demand would Source: Knight Frank Research play out by the end of the year. However, with business activity resuming and picking up pace since June 2020, sentiments

have improved and transaction activity has AHMEDABAD OFFICE MARKET VACANCY gathered momentum to culminate in the highest quarterly transacted volumes over Vacancy the past two years during Q4 2020. The 0.07 45% mn sq m (0.8 mn sq ft) transacted in Q4 35% 2020 was nearly twice the average quarterly 30% transacted volume in 2019. 25%

20% • Transacted volumes which were down ap- 15% proximately 15% on an annual basis, nearly 10% equaled the average transacted volumes 5% of the trailing three years at 0.1 mn sq m 0% (1.31 mn sq ft), and belied the expectations H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 of a drastic drop in demand for 2020 that seemed to dominate market opinion just a Source: Knight Frank Research few months ago.

• The BFSI and Information Technology transaction was a 0.02 mn sq m (0.2 mn sq ft) lease signed by the Bank of America at sectors have largely sustained their share of Savvy Pragya in GIFT City. total transactions during H2 2020 com-

pared to H2 2019. Two of the largest trans- • The two transactions also caused the PBD to claim 66% of total transactions during actions in H2 2020 amounted to 51% of the H2 2020 compared to 40% in H2 2019. The CBD West business district which usually total transacted area during the period and dominates the transactions pie, saw only 0.27 mn sq ft or 33% of transactions during the represented both these sectors. The largest period. However, almost 75% of transactions during the period still took place in CBD West.

29 DABHODA GANPATPURA JAMIATPURA

INDIA REAL ESTATE - AHMEDABAD SHANTIGRAM INDIA REAL ESTATE - AHMEDABAD

PORE RAYSAN

ADALAJ VADODARA KAROLI JASPUR VADSAR PIROJPUR

• The Manufacturing sector experienced a substantial increase in • Ahmedabad is still a fledgling office market, compared to cities KHORAJ AMBAPUR DANTALI VALAD take-up due to a 0.01 mn sq m (0.08 mn sq ft) lease signed by Bax- like Mumbai, Bengaluru and Delhi NCR. However, with mounting KHODIYAR ter Pharmaceuticals at Navratna Corporate Park on Bopal-Ambli vacancy levels, rents have been under pressureTHOL in the market and LILAPUR Road in CBD West. have fallen by 4.5% YoY to INR 442 per sq m per month (INR 41 KHATRAJ ZUNDAL KARAI per sq ft per month) inTHOL H2 2020. While transaction activity has LAPKAMAN TRAGAD LIMBADIA • While the movement in transacted volumes during the year was held reasonably steady in this pandemic impacted environment, AMIYAPUR

the market will be hard pressed to maintain equilibrium if theSANAWAD SUGHAD encouraging, the vacancy level rose over nine percentage points MEDRA

in the same period as fresh office space completions amounted rate at which new office spaces have been coming online, contin- CHANDKHEDA

ADHANA NASMED NIGAM NAGAR KOTARPUR RAIPUR to almost four times the transacted volumes during 2020. The va- ues to persist. RAKANPUR OGNAJ cancy level stands at 45.2% at the end of 2020, the highest among RANASAN SANTEJA

the eight markets under coverage. BHAT GOTA ENASAN

VAYANA GIDC NARODA

BUSINESS DISTRICT CLASSIFICATION NOBLE NAGAR CHANDLODIA SABARMATI HANSOL BILASIYA

VAHELAL Business district Micro markets UNALI VIJAY NAGAR CHANAKYAPURI CBD West Bodakdev, Keshav Baug, Prahladnagar, Satellite, SG Highway, Thaltej RANCHARDA NAVA NARODA SOLA VILLAGE CHEKHLA

PBD Gandhinagar, GIFT City MEGHANI NARANPURA NAGAR CBD Ashram Road, Ellis Bridge, Paldi PALODIA MEMNAGAR KRISHNANAGAR

THALTEJ DUBESHWAR

KATHWADA NIKOL Source: Knight Frank Research NAVRANGPUR

SECTOR-WISE SPLIT OF TRANSACTIONS MANIPUR BODAKDEV BOPAL BAPUNAGAR SHAHPUR KUBADTHAL GHUMA ODHAV BHUVALDI INDUSTRIAL H2 2019 H2 2020 GIDC ESTATE INDUSTRIAL GODHAVI SPRING VALLEY ODHAV KHADIA AREA 36% BFSI 34% NIYOJAN NAGAR

SHERKOTDA KANBHA 43% Information Technology 45% BAGODARA

SHELA Manufacturing 1% 15% KANETI KUJAD VASNA VEJALPUR-2 AMRAIWADI 1% Co-working 2% With business activity MAHADEV MAKARABA JUHAPURA NAGAR 18% Other Services 5% resuming and picking

RAMOL up pace since June SARKHEJ GAM Note: BFSI includes BFSI support services ISANPUR MEMADPUR SANAND Source: Knight Frank Research 2020, sentiments have CHALODA BHAVDA GIDC BAKROL BURNI SINGARVA VATVA improved and transaction GERATNAGAR SANATHAL VATVA

AVERAGE DEAL SIZE AND NUMBER OF DEALS activity has gathered PIPLAJ

NAROLGAM momentum to culminateKOLAT H2 2019 H2 2020 VINZOL UNDREL DHAMATVANA in the highest quarterly VANZAR

transacted volumes over VANCH PIPAN LAXMIPUR HATHIJAN the past two years during 2,024sq m 2,928 sq m Q4 2020. (21,789) (31,517) VISALPUR BADODRA sq ft sq ft MORAIYA HIRAPUR

ASLALI CHANGADAR 44 26 GAMDI deals deals NANDEJ

TAJPUR DEVDI Source: Knight Frank Research JINJAR

RASKA MODASAR CHOSAR

30 SARI KASINDRA BAREJADI JETALPUR

MATODA GIRAMTHA DABHODA GANPATPURA JAMIATPURA

SHANTIGRAM INDIA REAL ESTATE - AHMEDABAD

PORE RAYSAN

ADALAJ VADODARA KAROLI JASPUR VADSAR PIROJPUR

KHORAJ AMBAPUR DANTALI Office Transactions VALAD

KHODIYAR H2 2020 Transactions 2020 Transactions THOL mn sq m (mn sq ft), YoY changeLILAPURmn sq m (mn sq ft), YoY change KHATRAJ ZUNDAL KARAI

THOL LAPKAMAN

TRAGAD LIMBADIA AMIYAPUR

SANAWAD SUGHAD MEDRA

CHANDKHEDA PBD

ADHANA NASMED NIGAM NAGAR KOTARPUR RAIPUR RAKANPUR 0.050 (0.54) 0.05 (0.58) OGNAJ RANASAN 40% 2020 -9% SANTEJA H2 2020

BHAT GOTA ENASAN

VAYANA GIDC NARODA

NOBLE NAGAR CHANDLODIA SABARMATI HANSOL BILASIYA

VAHELAL UNALI VIJAY NAGAR CHANAKYAPURI

RANCHARDA NAVA NARODA SOLA VILLAGE CHEKHLA

MEGHANI NARANPURA NAGAR PALODIA MEMNAGAR KRISHNANAGAR

THALTEJ DUBESHWAR

KATHWADA NIKOL NAVRANGPUR CBD CBD West 0.001 (0.01) 0.003 (0.03) MANIPUR BODAKDEV 0.025 (0.27) 0.05 (0.57) BOPAL BAPUNAGAR 71% 2020 2%

SHAHPUR H2 2020 52% 2020 -35% KUBADTHAL H2 2020 GHUMA ODHAV BHUVALDI INDUSTRIAL GIDC ESTATE INDUSTRIAL GODHAVI SPRING VALLEY ODHAV KHADIA AREA NIYOJAN NAGAR

SHERKOTDA KANBHA BAGODARA

SHELA KANETI KUJAD VASNA VEJALPUR-2 AMRAIWADI

MAHADEV

MAKARABA JUHAPURA NAGAR

RAMOL SARKHEJ GAM ISANPUR MEMADPUR SANAND

CHALODA BHAVDA GIDC BAKROL BURNI SINGARVA VATVA GERATNAGAR SANATHAL VATVA

PIPLAJ

NAROLGAM KOLAT

VINZOL UNDREL DHAMATVANA VANZAR

VANCH PIPAN LAXMIPUR HATHIJAN

VISALPUR BADODRA

MORAIYA HIRAPUR

ASLALI CHANGADAR GAMDI

NANDEJ

TAJPUR Source: Knight Frank Research DEVDI All maps are for representational purpose not to scale JINJAR

RASKA MODASAR CHOSAR

SARI KASINDRA 31 BAREJADI JETALPUR

MATODA GIRAMTHA DABHODA GANPATPURA JAMIATPURA

SHANTIGRAM INDIA REAL ESTATE - AHMEDABAD INDIA REAL ESTATE - AHMEDABAD

PORE RAYSAN

ADALAJ VADODARA KAROLI JASPUR VADSAR PIROJPUR

KHORAJ AMBAPUR DANTALI Office Rental VALAD

KHODIYAR Rental value range in H2 2020 in 12-month 6-month THOL INR/sq m/month (INR/sq ft/month)LILAPUR change change KHATRAJ ZUNDAL KARAI

THOL LAPKAMAN

TRAGAD LIMBADIA AMIYAPUR

SANAWAD SUGHAD PBD MEDRA

344-441 CHANDKHEDA -5.5% -3% (32-41) ADHANA NASMED NIGAM NAGAR KOTARPUR RAIPUR RAKANPUR OGNAJ RANASAN

SANTEJA

BHAT GOTA ENASAN

VAYANA GIDC NARODA

NOBLE NAGAR CHANDLODIA SABARMATI HANSOL BILASIYA

VAHELAL UNALI VIJAY NAGAR CHANAKYAPURI

RANCHARDA NAVA NARODA SOLA VILLAGE CHEKHLA

MEGHANI NARANPURA NAGAR PALODIA MEMNAGAR KRISHNANAGAR

THALTEJ DUBESHWAR

KATHWADA NIKOL NAVRANGPUR CBD West CBD MANIPUR BODAKDEV431-560 BOPAL -4.5% -2% 409-484 BAPUNAGAR (40-52) SHAHPUR -5% -3% (38-45) KUBADTHAL GHUMA ODHAV BHUVALDI INDUSTRIAL GIDC ESTATE INDUSTRIAL GODHAVI SPRING VALLEY ODHAV KHADIA AREA NIYOJAN NAGAR

SHERKOTDA KANBHA BAGODARA

SHELA KANETI KUJAD VASNA VEJALPUR-2 AMRAIWADI

MAHADEV

MAKARABA JUHAPURA NAGAR

RAMOL SARKHEJ GAM ISANPUR MEMADPUR SANAND

CHALODA BHAVDA GIDC BAKROL BURNI SINGARVA VATVA GERATNAGAR SANATHAL VATVA

PIPLAJ

NAROLGAM KOLAT

VINZOL UNDREL DHAMATVANA VANZAR

VANCH PIPAN LAXMIPUR HATHIJAN

VISALPUR BADODRA

MORAIYA HIRAPUR

ASLALI CHANGADAR GAMDI

NANDEJ

TAJPUR Source: Knight Frank Research DEVDI All maps are for representational purpose not to scale JINJAR

RASKA MODASAR CHOSAR

SARI KASINDRA 32 BAREJADI JETALPUR

MATODA GIRAMTHA DABHODA GANPATPURA JAMIATPURA

SHANTIGRAM INDIA REAL ESTATE - AHMEDABAD

PORE RAYSAN

ADALAJ VADODARA KAROLI JASPUR VADSAR PIROJPUR

KHORAJ AMBAPUR DANTALI VALAD

KHODIYAR THOL LILAPUR Government stimulus KHATRAJ ZUNDAL KARAI

THOL LAPKAMAN

TRAGAD LIMBADIA AMIYAPUR

SUGHAD for real estate in Q4 2020 SANAWAD MEDRA

CHANDKHEDA - YASHWIN BANGERA VICE PRESIDENT - RESEARCH ADHANA NASMED NIGAM NAGAR KOTARPUR RAIPUR RAKANPUR OGNAJ RANASAN

SANTEJA

BHAT GOTA ENASAN

VAYANA GIDC NARODA

NOBLE NAGAR CHANDLODIA SABARMATI HANSOL BILASIYA

VAHELAL UNALI VIJAY NAGAR CHANAKYAPURI

RANCHARDA NAVA NARODA SOLA VILLAGE CHEKHLA

MEGHANI NARANPURA NAGAR PALODIA MEMNAGAR KRISHNANAGAR

THALTEJ DUBESHWAR

KATHWADA NIKOL NAVRANGPUR

MANIPUR BODAKDEV BOPAL BAPUNAGAR SHAHPUR KUBADTHAL GHUMA ODHAV BHUVALDI INDUSTRIAL GIDC ESTATE INDUSTRIAL GODHAVI SPRING VALLEY ODHAV KHADIA AREA NIYOJAN NAGAR

SHERKOTDA KANBHA BAGODARA

SHELA KANETI KUJAD VASNA VEJALPUR-2 AMRAIWADI

MAHADEV

MAKARABA JUHAPURA NAGAR

RAMOL SARKHEJ GAM ISANPUR MEMADPUR SANAND

CHALODA BHAVDA GIDC BAKROL BURNI SINGARVA VATVA GERATNAGAR SANATHAL VATVA

PIPLAJ

NAROLGAM KOLAT

VINZOL UNDREL DHAMATVANA he real estate sector has been undergoing a transformation While the real estate sector was adjusting to the new normal that VANZAR in the past five years. It is evolving from an opaque, slow these regulations imposed, the liquidity crisis of the previous year VANCH PIPAN moving business that heavily favoured the developer to a and the ongoing pandemic have put the sector under tremendous LAXMIPUR HATHIJAN T well-regulated, transparent business that fosters an increasingly pressure. Stimuli such as the aggressive interest rate cuts by the RBI buyer friendly environment and helps the long-term health and state level measures such as the stamp duty cuts introduced by VISALPUR BADODRA of the market. Central government measures such as the Real the Maharashtra government are proving to be an effective buffer MORAIYA HIRAPUR Estate (Regulation and Development) Act (RERA), 2016, Benami for end-user demand, and helping the sector overcome the current ASLALI CHANGADAR GAMDI Transactions Amendment Act 2016, ‘Housing For All’ initiative and crisis. The Gujarat government also took steps in the December 2020 the granting of infrastructure status to affordable housing have quarter to alleviate some of the pressure on the real estate market. NANDEJ

TAJPUR DEVDI radically impacted residential market dynamics in recent years. JINJAR

RASKA MODASAR CHOSAR

SARI KASINDRA BAREJADI 33 JETALPUR

MATODA GIRAMTHA INDIA REALINDIA ESTATE REAL ESTATE- AHMEDABAD INDIA REAL ESTATE

The COVID-19 pandemic that caused a pronounced slump in the making it more attractive for prospective buyers. Home-buyers in real estate market, has severely impacted the Ahmedabad real estate Ahmedabad have a definite preference for larger houses and this market as well. Sales volume as well as prices have stagnated during need for more space has only increased since the pandemic. The the period and further increased the financial stress on developers. additional 10 sq mt or 106 sq ft will effectively allow developers to Residential development is a low margin business in Ahmedabad plan for an additional room in affordable housing projects. This move as land prices are high compared to the prevailing price per sq ft is more attuned to the market and will help boost residential demand. of properties, which is the lowest among the top eight cities under our coverage. Due to the already low margins, developers have little Interest relief on chargeable FSI: The state government leeway to compromise further on prices to attract buyers. Hence, will also provide interest relief on payment of chargeable FSI (Floor the focus needs to be on optimising or reducing costs to improve Space Index). Developers have to pay charges for additional FSI above margins or allow for flexibility on prices. the permissible base FSI. An interest is charged if the amount is paid in instalments. The government is considering waiving off the Recent measures taken by the state government in Q4 2020 such as interest on these instalments to provide financial relief to developers enabling developers to acquire land for affordable housing at lower and to introduce a uniform policy with regard to chargeable FSI. This costs and increasing the maximum size of apartments to qualify as will reduce project costs significantly. affordable housing, are ostensibly aimed at lowering overall costs and being better attuned to home-buyer preferences in Ahmedabad. Here Same day approval to low-rise building plans: are some of the prominent measures considered: Steps are being taken to further simplify the building plan approval process under the Online Development Permission System (ODPS). Agricultural land can now be acquired for The government is working towards granting final building plan affordable housing:Real estate developers will now be allowed approvals to low-rise buildings on the same day. to purchase agricultural land for affordable housing under Section 63AAA of the Gujarat Tenancy Act. This section allows purchase While these measures are aimed at reducing development costs, of agricultural land for bona fide industrial purposes. With this, a streamlining approval processes and increasing unit sizes, their developer will be able to acquire agricultural land in the name of his influence will only be felt on upcoming or future projects and not in company and then initiate the process to convert land into non- the short term. The sector requires measures that will also influence agricultural land after the acquisition. This is aimed at reducing the the near term such as the stamp duty cut as done by the Maharashtra overall project cost and ensuring faster execution of realty projects. government. A measure like this with immediate impact on demand will help the real estate sector in Gujarat tide over the ongoing crisis Carpet area limit for affordable housing units more effectively. raised: The carpet area limit for affordable housing units has been raised from 80 sq mt to 90 sq mt. Earlier, projects with apartment units exceeding 80 sq mt could not qualify as affordable housing projects as defined by RERA. With the raising of the threshold, housing units of 90 sq mt will be included in affordable housing

34 INDIAINDIA REAL REAL ESTATE ESTATE - BENGALURU

BENGALURU RESIDENTIAL AND OFFICE MARKET

35 35 INDIA REALINDIA ESTATE REAL ESTATE - BENGALURU INDIA REALINDIA ESTATE REAL ESTATE- BENGALURU

Shantanu Mazumder Senior Branch Director - Bangalore

t the beginning of 2020, no one ever thought how private space in the home has been altered to accommodate WFH, challenging this year would turn out to be. The COVID-19 hence newer projects are focused on this inclusion, giving flexibility Apandemic compelled real estate stakeholders to rethink and feasibility to end users along with the wellness concept. In the their strategy, be it the supply side or demand side. Bengaluru has established micro-markets, there is a surge in demand for such been the most resilient real estate market of the country when it homes which allows flexibility, and customers are willing to pay a comes to commercial, residential, retail or any other real estate premium for it. Furthermore, employees need not be closer to their asset class. The presence of top-grade developers helps the market work location anymore and can choose to stay wherever they feel in positioning products in the most appropriate way be it product is more apt for them from a price or social infrastructure point of quality, pricing, product mix, sizing, while timely delivery of product view. This trend is quite evident when we look at the drop in unsold always helps in pushing the buyer’s confidence. This time around, inventory in the second half of 2020, meeting the post-pandemic the Government spur, lower interest rates, GST/stamp duty reduction demand requirement of the customers. and an overall improvement in the economic environment continues to propel the demand in the city. As a new normal emerges out of this pandemic, technology is playing a significant role in acting as the first touchpoint towards driving real Bengaluru is the fourth richest city in India and largely an end-user estate sales. 4D walk-throughs, Virtual Reality and different digital driven market which has the largest share of commercial office and media platforms are the new brushed up tools being used by the IT space in the country. Furthermore, the IT segment is the largest residential sales team to engage with their clients. employer, and the start-up ecosystem pulls people from other parts of the country. Prior to Bengaluru becoming the Silicon Valley of In the corporate real estate world, work-from-home, social India, it was also amongst the top destinations providing quality distancing, employee well-being, cost optimization and weathering education, therefore, that became the direct feeder to the IT segment. the pandemic were the topmost priorities during the lockdown, but The large presence of top developers of the country in Bengaluru city, post lockdown, with the vaccine in sight, the strategy has changed to healthcare facilities and beautiful climate give an edge to the city become more forward looking. Though the commercial space take-up over others. The city offers various categories of products like globally plan has got delayed during the year, fresh take-up of significant sizes benchmarked business parks, green buildings, residential products is happening, thus indicating that the demand has started to pick up. catering to LIG, MIG, HIG, Luxury and plotted developments, thus During the year, we witnessed large institutional investors picking catering to a wide spectrum of demand. up commercial stock, showing the strength of this asset class with its strong-rooted fundamentals. These private equity deals brought Due to the pandemic, the concept of Work-From-Home became the significant capital to the developer which will help them weather the need of the hour during the lockdown; post lockdown, maintaining pandemic situation and come back strong. social distancing became a part of the protocol for everyone. Work- From-Home has had a positive impact for the housing sector as it brought out the need for better housing facilities. Today, the need for

36 INDIA REAL ESTATE - BENGALURU INDIA REALINDIA ESTATE REAL ESTATE- BENGALURU

Bengaluru Residential Market

BENGALURU MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

Launches 19,929 - 41% 9,123 -29% 4,403 -7% (housing units)

Sales 23,576 -51% 11,402 -43% 6,490 32% (housing units)

Price 53,120/sq m -0.8% - - - - (wt avg)* (4,935/sq ft)

Unsold inventory 74,764 -5% - - - - (housing units)*

Quarters to sell* 8.3 - - - - -

Age of unsold inventory 15.0 - - - - - (in quarters)*

Note – 1 square metre (sq m) = 10.764 square feet (sq ft), *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Sales (housing units) 8,693 3,484 4,912 6,490

Sales as % of 2019 Quarterly average 72% 29% 41% 54%

Launches (housing units) 8,963 1,843 4,720 4,403

Launches as % of 2019 Quarterly average 106% 22% 56% 52%

Source: Knight Frank Research

• Over the last decade, the Bengaluru residential market has mean- • Given the pandemic shock to market activity in the latter part of ingfully scaled up its performance and now stands amongst the Q1 2020 and the full blown impact of lockdown in Q2 2020, on a foremost markets in the country. In 2019, the city ranked second full year basis – 2020 saw the lowest sales performance in a de- in terms of sales performance among the top 8 cities of India and cade. 23,576 units were sold in 2020 compared to 28,318 units sold continues to enjoy the active participation of global institutional in 2010. Q3 2020 saw another city-wide lockdown in the month players on both demand as well as supply side. With this back- of July 2020. These events impacted both consumer ability and drop, the unannounced COVID-19 crisis, which initially shook the sentiment to purchase a house. The supply side was disrupted too market, now reinforces the strength of the market. as construction activity was hampered by constraint on labour and finance. Influenced by these upheavals, the housing sales

37 INDIA REAL ESTATE - BENGALURU INDIA REAL ESTATE - BENGALURU

were down 51% in 2020 compared to 2019. Down 43% in H2 2020 better placed and largely maintained jobs and income scales compared to H2 2019, the impact was expectedly visible on the compared to their pre-COVID level. This lent further resilience to half year performance too. Launches too fell by 41% YoY in 2020 the city’s housing market during these uncertain times. and 29% YoY in H2 2020. • The residential property prices which were increasing in the • Although the COVID-19 fear still looms large, the city has seen a beginning of 2020, have now softened a bit. However, because of marked improvement in sales performance in the last 4-5 months the underlying characteristics of the market and improved sales and this is visible in quarterly numbers. Q4 2020 recorded 32% performance, the pricing power in the city has been maintained, QoQ growth on the back of 41% QoQ growth in Q3 2020. Residen- with only marginal price cuts or freebies amounting to 2-3% of tial sales in the city reached 54 % of the pre-COVID level, with Q4 the property value. Multi-decade low home loan interest rate and 2020 sales measured as a % of 2019 Quarterly average sales. A host relatively affordable price dynamics in the city have helped the of factors contributed to this improvement even as the prolonged cause of demand revival even during these pandemic times. At pandemic continues to keep economic activities constrained. the city level, weighted average prices declined by 1% YoY during 2020. Few developments have also recorded a marginal price • As a direct result of the pandemic related experiences, there is increase in the last 2-3 months. an improved consumer perception for owning bigger and better houses. Consumers are looking to buy ready to move houses with • With consumer preference shifting towards ready to move better amenities. This, in effect, has helped bigger developers houses, developers have restrained new project launches in this with gated community projects. year and reoriented operational and financial bandwidth towards completion of ongoing projects. The recurring spate of sales com- • Additionally, unlike other industries which saw significant in- pared to launches have affected a gradual decline in the inventory come disruption during the pandemic, the Information Technol- level in the city. On an annual basis, unsold inventory is down 5% ogy sector, a key employment driver in Bengaluru, was relatively to 74,764 housing units as at end of 2020.

BENGALURU RESIDENTIAL MARKET

Launches Sales Wt avg price (INR/sq m)

30000 58000

25000 56000

20000

54000 m INR/sq No. of units No.

15000

52000

10000

50000 5000

0 48000 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

38 INDIA REAL ESTATE - BENGALURU

BENGALURU AFFORDABLE MARKET ACTIVITY (UPTO INR 5 million segment)

12,000

10,000 8,000 % No. of units No. 6,000 32Increase in sales in Q4 2020 compared to Q3 2020 4,000

2,000

0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

MICRO-MARKET CLASSIFICATION

Micro market Locations

MG Road, Lavelle Road, Langford Town, Vittal Mallya Road, Richmond Central Road

East Whitefield, Old Airport Road, Old Madras Road, KR Puram, Marathahalli

West Malleshwaram, Rajajinagar, Yeswanthpur, Tumkur Road, Vijayanagar

North Hebbal, Bellary Road, Hennur, Jakkur, Yelahanka, Banaswadi

Koramangala, Sarjapur Road, Jayanagar, JP Nagar, HSR Layout, South Kanakapura Road, Bannerghatta Road

Source: Knight Frank Research Unlike other industries which saw significant income disruption TICKET SIZE SPLIT OF SALES during the pandemic, the

< INR 5 mn > INR 5 mn Information Technology sector, a key employment H2 2019 35% 65% driver in Bengaluru, was H2 2020 65% 35% relatively better placed and largely maintained jobs and Source: Knight Frank Research income scales compared to their pre-COVID level.

39 INDIA REAL ESTATE - BENGALURU INDIA REAL ESTATE - BENGALURU

Residential BSF CAMPUS Launches and Sales

TORENAGASANDRA

Launches Sales % Change YELAHANKA (housing units) (housing units) (YOY)

BEML LAYOUT

RK HEGDE NAGAR North

1,958 -30%SAHAKARA 3,757 -57% NAGAR

2,958 -31% 2020 5,180 -55% H2 2020 JALAHALLI

ASHWATH NAGAR

HEBBAL

YESHWANTHPUR KALYAN NAGAR BATTARAHALLI JAYBHAMNAGAR

SHIVA NAGAR

RAGAVENDRA BANASWADI NAGAR

MALLESWARAM

MAHADEVAPURA BASAVESHWARA RAJAJINAGAR West NAGAR

CV RAMAN 442 -70% 715 -74% Central NAGAR

WHITEFIELD

804 -59% 2020 1,667 -63% 0 -100% 0 -100% H2 2020 VIJAYANAGAR NEW 30 -27% 2020 55 -152% THIPPASANDRA H2 2020 East

VARTHUR KODI 2,983 -27% 7,130 -25% MARATHAHALLI CHAMRAJPET VILLAGE 3,750 -27% 2020 7,281 -37% H2 2020

ADUGODI BANASHANKARI KADUBEESANAHALLI

KORAMANGALA

KENGERI SATELLITE TOWN JAYANAGAR ITTAMADU BTM LAYOUT

J.P. NAGAR HSR LAYOUT

KUMARASWAMY LAYOUT

KENGERI DODDAKANNELLI

HONGASANDRA

KUMARASWAMY LAYOUT South

3,740 -16% 8,327 -35%

3,860 -54% 2020 9,396 -54% H2 2020

Source: Knight Frank Research All maps are for representational purpose not to scale

40 INDIA REAL ESTATE - BENGALURU

Residential BSF CAMPUS Unsold Inventory

TORENAGASANDRA Unsold inventory QTS (in Age of inventory YELAHANKA (housing units) YoY change quarters) (in quarters)

BEML LAYOUT

RK HEGDE NAGAR

North

SAHAKARA NAGAR 16,966 8.1

-8% 16.1

JALAHALLI H2 2020

ASHWATH NAGAR

HEBBAL

YESHWANTHPUR KALYAN NAGAR BATTARAHALLI JAYBHAMNAGAR

SHIVA NAGAR

RAGAVENDRA BANASWADI NAGAR

MALLESWARAM

MAHADEVAPURA BASAVESHWARA RAJAJINAGAR NAGAR

CV RAMAN NAGAR

WHITEFIELD

West VIJAYANAGAR NEW THIPPASANDRA

7,468 9.7 Central VARTHUR KODI -11% 15.2 H2 2020 219 10.3 East MARATHAHALLI CHAMRAJPET VILLAGE -20% 18.3 H2 2020 16,982 7.2

-1% 13.0 H2 2020 ADUGODI BANASHANKARI KADUBEESANAHALLI

KORAMANGALA

KENGERI SATELLITE TOWN JAYANAGAR ITTAMADU BTM LAYOUT

J.P. NAGAR HSR LAYOUT

KUMARASWAMY LAYOUT

KENGERI DODDAKANNELLI

HONGASANDRA

South KUMARASWAMY LAYOUT 33,129 9.0

-3% 15.5 H2 2020

Source: Knight Frank Research All maps are for representational purpose not to scale

41 INDIA REAL ESTATE - BENGALURU INDIA REAL ESTATE - BENGALURU

Residential Pricing

Price range in H2 2020 6 month Micro Market Location 12 month Change in INR/sq m (INR/sq ft) Change

Langford Town 161,460-220,662 (15,000-20,500) -1% -1% Central Lavelle Road 226,044-322,920 (21,000-30,000) 0% 0%

KR Puram 40,903-72,119 (3,800-6,700) 2% 0%

East Whitefield 48,438-78,577 (4,500-7,300) 2% -1%

Marathahalli 45,209-75,348 (4,200-7,000) 0% -1%

Hebbal 59,202-109,793 (5,500-10,200) 1% 0%

Yelahanka 43,056-75,348 (4,000-7,000) 2% -1% North Thanisandra 43,056-86,112 (4,000-8,000) 2% 0%

Hennur 43,056-86,112 (4,000-8,000) 3% 0%

Sarjapur Road 43,056-80,730 (4,000-7,500) 0% 0%

Kanakpura Road 43,056-69,966 (4,000-6,500) -3% -2% South Electronic City 37,674-59,202 (3,500-5,500) -2% -1%

Bannerghatta Road 37,674-75,348 (3,500-7,000) -1% -1%

Yeshwantpur 64,548-113,022 (6,000-10,500) 0% 0%

Malleswaram 86,112-150,696 (8,000-14,000) -2% -1% West Rajajinagar 75,348-161,460 (7,000-15,000) 0% 0%

Tumkur Road 32,292-64,584 (3,000-6,000) 0% 0%

Source: Knight Frank Research

42 INDIA REAL ESTATE - BENGALURU

Bengaluru Office Market

BENGALURU MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

New completions 0.88 (9.42) -41% 0.50 (5.42) -35% 0.40 (4.35) 307% mn sq m (mn sq ft)

Transactions 1.14 (12.32) -19% 0.70 (7.54) 8% 0.59 (6.40) 459% mn sq m (mn sq ft)

Weighted average transacted rental INR/sq 861 (80) 0% - - - -4% m/month (INR/sq ft/month)*

Stock mn sq m (mn sq ft)* 16.2 (174.2) 6% - - - -

Vacancy (%)* 9.3% - - - - -

Note – 1 square metre (sq m) = 10.764 square feet (sq ft),*End of period number. Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Transactions mn sq m (mn sq ft) 0.39 (4.19) 0.05 (0.58) 0.11 (1.15) 0.59 (6.40)

Transactions as % of 2019 Quarterly average 110% 15% 30% 168%

New completions mn sq m (mn sq ft) 0.37 (4.0) - 0.10 (1.07) 0.40 (4.35)

New Completions as % of 2019 Quarterly 105% 0% 28% 114% average

Source: Knight Frank Research

• In 2019, the Bengaluru office market had a record year when As an initial response to the pandemic and associated lockdowns, transaction activity scaled an all-time high of 1.42 mn sq m (15.25 occupiers temporarily deferred space take-up decisions and office mn sq ft). Capturing 25% of the transaction share of the India of- transaction activity was adversely impacted in Q2 2020. fice market, Bengaluru was on course to scale a new peak in 2020. • With gradual relaxation of the lockdown in Q3 2020 and better • The momentum was strong on both transaction volume and preparedness for the prolonged coronavirus outbreak, businesses rents at the start of 2020 until March 2020, when the COVID-19 - especially technology driven enterprises - made a strong come- pandemic hit India and brought economic activity to a standstill. back and actively began scouting for office spaces in line with

43 INDIA REAL ESTATE - BENGALURU INDIA REAL ESTATE - BENGALURU

their long-term business plans. As a result, transaction activity being delivered. In Q4 2020, 4.35 mn sq ft of new office space, picked-up meaningfully in Q3 2020 as compared to the previous 307% QoQ higher, was delivered - making it the best quarter in quarter. 2020. On an annual basis, new completions were lower by 41% YoY in 2020. • The most recent period of Q4 2020 has been a spectacular period for the Bengaluru office market – recording 6.4 mn sq ft of gross transactions, the volume of activity being far ahead of the Q3 2020 performance. This quarter turned out to be much better than the same quarter last year and surpassed the cumulative performance of first three quarters of 2020.

• A host of factors played a role in enabling this stupendous market performance in Q4 2020. Firstly, there was pent-up demand from occupiers who had put their space take up plans on hold earlier this year in the wake of the pandemic and associated lockdowns. Secondly, the office space sign-ups have been from global technology majors and other large corporates, who are taking a strategic, long-term view on their office occupancy plans. Large occupiers have been particularly confident about their long-term plans and have made forward commitment for office space which is yet under construction. Pre-commitment activity remained particularly strong with 2.47 mn sq ft of space being taken up in Q4 2020, which includes large deals by Google and Amazon.

• Developers too have shown increased flexibility in terms of rent as well as deal terms concerning rent free period, lock-in period, hard options, etc. These interventions resulted in closure of deals in quick succession in Q4 2020.

Office space sign-ups • These recent developments ensured that the annual transaction volume, recorded at 1.14 mn sq m (12.32 mn sq ft), was lower by have been from global just 19% YoY in 2020. The rent in the city which was escalating technology majors and early this year softened in Q4 2020. The weighted average rent is other large corporates, lower by 4% QoQ in Q4 2020 and stable on an annual basis. who are taking a strategic,

• Although the number of deals have come down compared to last long-term view on their year, with larger deals ruling the market, the average deal size office occupancy plans. has gone up 61% from 56,503 sq ft in H2 2019 to 90,890 sq ft in Large occupiers have been H2 2020. As regards the occupier profile, Information Technol- ogy industry maintained its place as the top consumer of office particularly confident space with a 42% demand share in H2 2020 as against 51% in H2 about their long-term 2019, followed by the manufacturing industry which doubled its plans and have made demand share to 25% in H2 2020 as compared to 12% in H2 2019. forward commitment for

• In terms of new completion, the return of on-site labour to office space which is yet pre-COVID levels as also a fully functional approval machinery under construction. ensured that projects which were stuck earlier this year are now

44 INDIA REAL ESTATE - BENGALURU

BENGALURU OFFICE MARKET

Completions Transactions

0.8

0.7 0.6 % 459 Jump in transactions in Q4 2020 0.5 compared to Q3 2020

0.4

0.3 mn sq m

0.2

0.1

0.0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

BENGALURU OFFICE MARKET VACANCY

Vacancy

10%

0% H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research Pre-commitment activity remained particularly strong with 2.47 mn sq ft of space being taken up in Q4 2020, which includes large deals by Google and Amazon

45 INDIA REAL ESTATE - BENGALURU INDIA REAL ESTATE - BENGALURU

BUSINESS DISTRICT CLASSIFICATION BSF CAMPUS

Business district Micro markets

TORENAGASANDRA Central business district (CBD) MG Road, Residency Road, Cunningham Road, YELAHANKA and off CBD Lavelle Road, Richmond Road, Infantry Road Indiranagar, Koramangala, Airport Road, Old Suburban business district (SBD) Madras Road Peripheral business district (PBD) BEML LAYOUT Whitefield % East RK HEGDE 307Jump in new completions in Q4 2020 NAGAR Peripheral business district (PBD) compared to Q3 2020 Electronic City, Bannerghatta Road South SAHAKARA NAGAR Peripheral business district (PBD) Thanisandra, Yelahanka, Devanahalli North JALAHALLI

ASHWATH Outer Ring Road (ORR) Hebbal ORR, Marathahalli ORR, Sarjapur Road ORR NAGAR

HEBBAL Source: Knight Frank Research

YESHWANTHPUR KALYAN NAGAR BATTARAHALLI JAYBHAMNAGAR

SHIVA NAGAR

RAGAVENDRA BANASWADI NAGAR

SECTOR-WISE SPLIT OF TRANSACTIONS MALLESWARAM

MAHADEVAPURA BASAVESHWARA RAJAJINAGAR NAGAR H2 2019 H2 2020 CV RAMAN NAGAR BFSI 6% 4% WHITEFIELD

Information Technology VIJAYANAGAR NEW 51% 42% THIPPASANDRA

12% Manufacturing 25% VARTHUR KODI

MARATHAHALLI 9% Co-working 6% CHAMRAJPET VILLAGE

23% Other Services 22%

ADUGODI BANASHANKARI KADUBEESANAHALLI

Note: BFSI includes BFSI support services Source: Knight Frank Research KORAMANGALA

KENGERI SATELLITE TOWN JAYANAGAR ITTAMADU BTM LAYOUT AVERAGE DEAL SIZE AND NUMBER OF DEALS J.P. NAGAR HSR LAYOUT

KUMARASWAMY LAYOUT H2 2019 H2 2020 KENGERI DODDAKANNELLI

HONGASANDRA

5,249sq m 8,444 sq m KUMARASWAMY (56,503) (90,890) LAYOUT sq ft sq ft 123 83 deals deals

Source: Knight Frank Research

46 INDIA REAL ESTATE - BENGALURU

Office Transactions BSF CAMPUS

H2 2020 Transactions 2020 Transactions mn sq m (mn sq ft), YoY change mn sq m (mn sq ft), YoY change TORENAGASANDRA

YELAHANKA

BEML LAYOUT

PBD North RK HEGDE NAGAR 0.003 (0.04) 0.04 (0.42)

-87% 2020 SAHAKARA-6%

H2 2020 NAGAR

JALAHALLI

ASHWATH NAGAR

HEBBAL

YESHWANTHPUR KALYAN NAGAR BATTARAHALLI JAYBHAMNAGAR

SHIVA NAGAR

RAGAVENDRA BANASWADI PBD East NAGAR 0.08 (0.81) 0.24 (2.62)

MALLESWARAM -42% 2020 -16% SBD H2 2020

0.09 (0.99) 0.13 (1.36) MAHADEVAPURA BASAVESHWARA RAJAJINAGAR NAGAR 42% 2020 -42% H2 2020 CV RAMAN NAGAR

WHITEFIELD

VIJAYANAGAR NEW THIPPASANDRA CBD & OFF CBD VARTHUR KODI 0.01 (0.08) 0.03 (0.31)

MARATHAHALLI VILLAGE -88% 2020 -79% CHAMRAJPET H2 2020

ORR

ADUGODI 0.34 (3.71) 0.50 (5.40) BANASHANKARI KADUBEESANAHALLI

4% 2020 -11% H2 2020

KORAMANGALA

KENGERI SATELLITE TOWN JAYANAGAR ITTAMADU BTM LAYOUT

J.P. NAGAR HSR LAYOUT

KUMARASWAMY LAYOUT

KENGERI DODDAKANNELLI

HONGASANDRA

KUMARASWAMY LAYOUT PBD South

0.17 (1.87) 0.20 (2.18)

347% 2020 19% H2 2020

Source: Knight Frank Research All maps are for representational purpose not to scale

47 INDIA REAL ESTATE - BENGALURU INDIA REAL ESTATE - BENGALURU

Office Rental BSF CAMPUS

Rental value range in H2 2020 in 12-month 6-month INR/sq m/month (INR/sq ft/month) change change TORENAGASANDRA

YELAHANKA

BEML LAYOUT

PBD North RK HEGDE NAGAR 538-861 -2% -3% (50-80) SAHAKARA NAGAR

JALAHALLI

ASHWATH NAGAR

HEBBAL

YESHWANTHPUR KALYAN NAGAR BATTARAHALLI JAYBHAMNAGAR

SHIVA NAGAR

RAGAVENDRA BANASWADI PBD East NAGAR 431-753 1% -3% MALLESWARAM (40-70) SBD

646-1,292 0% -5% MAHADEVAPURA BASAVESHWARA RAJAJINAGAR NAGAR (60-120)

CV RAMAN NAGAR

WHITEFIELD

VIJAYANAGAR NEW THIPPASANDRA

CBD & OFF CBD VARTHUR KODI

753-1,830 MARATHAHALLI 1% -4%CHAMRAJPET VILLAGE (70-170)

ORR

ADUGODI 753–1,238 BANASHANKARI -1% -5% (70–115) KADUBEESANAHALLI

KORAMANGALA

KENGERI SATELLITE TOWN JAYANAGAR ITTAMADU BTM LAYOUT

J.P. NAGAR HSR LAYOUT

KUMARASWAMY LAYOUT

KENGERI DODDAKANNELLI

HONGASANDRA

KUMARASWAMY LAYOUT PBD South

377-753 -1% -2% (35-70)

Source: Knight Frank Research All maps are for representational purpose not to scale

48 INDIA REAL ESTATE - BENGALURU

Resilience Of Bengaluru Real Estate Market

- VIVEK RATHI, DIRECTOR - RESEARCH

engaluru comes up as an important market on the real estate market of the country. Over the last decade, Bengaluru estate landscape of the country. One of the top 8 cities in the has steadily improved its market share in residential sales. With Bcountry, Bengaluru has maintained a steady pace of growth Bengaluru’s share in residential sales rising from 8% in 2010 to 15% in and charted its course amongst the foremost real estate markets in 2020, it now ranks among the top three. In terms of office transaction the country. Having exploited its unique position as a technology volume, Bengaluru has succeeded in being the foremost market in powerhouse, the city has established a strong foothold in the real the country in each successive year since 2010.

49 INDIA REALINDIA ESTATE REAL ESTATE- BENGALURU INDIA REAL ESTATE

Table: Resilience of Bengaluru real estate market (Market share and rank of Bengaluru among Top 8 cities in the country based on residential sales volume and office transactions volume)

Residential Office

Period Market share Rank Market share Rank

2010 8% 4 28% 1

2011 11% 4 31% 1

2012 14% 3 31% 1

2013 17% 3 28% 1

2014 20% 2 27% 1

2015 19% 2 26% 1

2016 19% 2 27% 1

2017 15% 3 27% 1

2018 18% 2 28% 1

2019 20% 2 25% 1

2020 15% 3 31% 1

Source: Knight Frank Research, Note: Top 8 cities include Mumbai, National Capital Region, Bengaluru, Hyderabad, Chennai, Pune, Ahmedabad and Kolkata.

In the backdrop of this performance is the development of an eco-sys- the country. Bengaluru also suffered in the initial days of the lock- tem for highly educated and skilled technology talent and participa- down with residential sales falling by 74% YoY and office transactions tion of global tech companies. Bengaluru has 961 university colleges, declining by 86% YoY in the June 2020 quarter. The city had a second the highest in the country. Besides, it is a magnet for attracting tech- lockdown in the September 2020 quarter. However, despite all odds, nology talent from all over India. The city also has a high density of the city has seen residential sales and office transactions improve Fortune 500 company offices. Consequently, start-ups have favoured meaningfully, in the September 2020 quarter and then further in the the city for both availability of skilled talent at a reasonable cost and December 2020 quarter. due to the presence of business opportunities from larger corporates. While many other cities have recorded improvement in sales in H2 These factors have made the Bengaluru market resilient and under- 2020, a key trigger for the same came in the form of lower property pinned the institutionalisation of the real estate market on the supply acquisition cost for homebuyers such as a cut in stamp duty rates or side. The city has a concentration of top developers of the country. meaningful price reductions from the developers. However, in the As regards the institutional investors, the city has been preferred by case of Bengaluru, the market has made a strong comeback without private equity and Real Estate Investment Trust (REIT) vehicles alike. such interventions. The stamp duty cut in Karnataka, which was This institutionalisation of the Bengaluru real estate market has announced in the initial days of the pandemic, covered only a limited made it even more resilient to face temporary crisis like the coronavi- segment of the housing market. On the pricing front, prices largely rus pandemic. remained resilient with developer interventions limited to payment period flexibility. These factors highlight the resilience of the Benga- With the onset of COVID-19 pandemic and associated lockdowns, luru real estate market and build confidence for a stronger trajectory widespread demand destruction was seen across the major cities of when normalcy returns post pandemic.

50 INDIAINDIA REAL REALESTATE ESTATE - CHENNAI

CHENNAI RESIDENTIAL AND OFFICE MARKET

5151 INDIA REAL ESTATE - CHENNAI INDIA REAL ESTATE - CHENNAI

Srinivas Anikipatti Senior Director – Tamil Nadu and Kerala

nown as the Detroit of India, Chennai offers a unique driver of Chennai’s office market, largely adopted a work from combination of robust infrastructure, easy international home policy during the lockdowns and continues to do so for now. Kconnectivity, rich talent pool, enabling policy environment, However, after the advent of the COVID vaccine, these companies affordable cost of living, low levels of air pollution and high levels of have plans to operate with a hybrid model – a mix of employees safety. working from office and home on a rotational basis. However, even with this new model, the IT sector office space requirement Globally, 2020 has been a challenging year on account of the ongoing will continue to remain the same, as de-densification and social COVID-19 pandemic. Chennai too had its share of challenges, distancing norms have increased the per employee sq ft area. Thus, including those in the real estate sector. However, two positives seem the floorplate requirement of offices will even out and be the same to have emerged from this one-of-a-kind, unprecedented calamity. as pre-COVID times, and so will their demand momentum. H2 2020 First, owing to the strict lockdowns, expenditures have gone down also saw increased activity among coworking operators as they offer and savings have considerably increased. Second, housing prices flexibility in leasing and provide managed office services. In terms of seem to have reached an all-time low during this crisis. Coupled with supply, the city is gearing up for a planned new supply of 35 mn sq ft multi-decadal low home loan interest rates, residential demand is which is expected to come online in phases, in 2 to 3 years. slated to pick up speed. With regards to infrastructure, the government has just announced Chennai’s residential real estate demand is already in recovery the launch of the third-phase of the Chennai Metro and a second mode in H2 2020 and the ready-to-move-in projects are seeing good commercial airport in Chennai. These projects will enhance traction. The affordable housing segment, the mainstay of Chennai’s connectivity and boost the city’s commerce. The new sunrise residential market, is seeing the highest rate of conversion. Further, sectors in Chennai are data centres, electric vehicles (EV), defence, more than 300 projects have received approval from the Chennai aerospace, renewable energy (wind and solar), tech textile and Metropolitan Development Authority (CMDA) indicating a positive pharmaceuticals. trend in launches for 2021. Chennai has thus shown resilience during the testing times of the The Chennai commercial office real estate market has seen a steady pandemic and has bounced back to almost pre-COVID levels of annual demand of around 4 mn sq ft for more than a decade. In 2019, activity. It is therefore no surprise that Chennai has emerged as an this demand peaked to a record high of around 6 mn sq ft. The city attractive city in South India for working as well as for living. is home to global bigwigs such as Wells Fargo, New York Bank (NYB) and the latest entrant Apple. The IT sector, which is the primary

52 INDIA REAL ESTATE - CHENNAI

Chennai Residential Market

CHENNAI MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 CHANGE (YOY) H2 2020 Q4 2020 CHANGE (YOY) CHANGE (QOQ)

Launches 7,234 -37% 3,714 -2% 1,167 -54% (housing units)

Sales 8,654 -49% 5,673 -29% 2,588 -16% (housing units)

Price 40,843/sq m -9% - - - - (wt avg)* (3,794/sq ft)

Unsold inventory 12,190 -10% - - - - (housing units)*

Quarters to sell* 3.8 - - - - -

Age of unsold inventory 15.5 - - - - - (in quarters)*

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Sales (housing units) 2,981 - 3,085 2,588

Sales as % of 2019 Quarterly average 70% 0% 73% 61%

Launches (housing units) 3,520 - 2,547 1,167

Launches as % of 2019 Quarterly average 122% 0% 88% 40%

Source: Knight Frank Research

Note: Q2 2020 market activity: COVID-19 disruptions in market activity led to a standstill in sales activity at residential project sites and registration offices during Q2 2020. In some cases, customers paid nominal amounts on application for housing units, which could be identified and allotted later. Such instances of transactions with limited details on booking have not been considered in the Q2 2020 numbers. With more details awaited on certainty of such transactions, the recording was deferred and the same was captured during the subsequent reporting period.

• The COVID pandemic has had a significant impact on Chennai’s had just begun to see stability in 2019. But this recovery was residential market this year. Launches and sales are at their short-lived as with the onset of the pandemic in March 2020, the decadal lows and prices have seen a considerable fall in 2020. market lost its momentum. The nationwide lockdowns halted construction activity and slowed down sales. • After struggling for 2 to 3 years, the residential market in Chennai

53 INDIA REAL ESTATE - CHENNAI INDIA REAL ESTATE - CHENNAI

• New project launches have dipped 37% Year-on-Year (YoY) in • Q4 2020 sales show a 16% QoQ dip as homebuyers hold onto their 2020. COVID-induced lockdowns and challenges stalled launches purchase decisions for the auspicious festivities of Pongal in across cities including Chennai. During March-April 2020, the month of January that bring attractive festive schemes and construction activity was at a complete standstill, and from May- discounts. October 2020, challenges such as shortage of labour, high input costs and low demand kept new supply in check. • In terms of geography, West Chennai was a favourite with both launches and sales in H2 2020. West zone launches doubled in • Still, Q3 2020 launches showed a considerable revival, driven by 2020 and this region saw the lowest dip in sales volume this year. clearances of pending project applications by local government Popular locations in the west include Koyambedu, Mogappair, authorities and the pent-up demand momentum. Porur and the upcoming Manapakkam neighbourhood. Besides these, Tambaram and Siruseri in South Chennai and • As of Q4 2020, most of the above challenges seem to have been Avadi and Thiruvallur in North Chennai are other popular addressed and launches appear to be getting back on track, residential catchments in the city, especially for the affordable albeit with a few months’ delay in their original timelines. As housing segment. With office space demand picking up in a result, H2 2020 launches are only 2% YoY below the H2 2019 the Old Mahabalipuram Road (OMR) belt, projects in Egattur, launches indicating a near restoration of the pre-COVID supply Shollinganallur and Navalur have also seen an increase in momentum. Q4 2020 launches show a 54% Quarter-on-Quarter traction in H2 2020. (QoQ) dip and this is in line with the general trend of developers holding back launches for the local festive quarter of January- • Residential prices have been subjected to tremendous pressure March every year, the Pongal season. this year with the COVID pandemic derailing the momentum of both sales and launches. The weighted average prices at the city • With respect to ticket sizes, as conversion rate continues to be level have seen a 9% YoY dip in 2020. On a positive note, these low higher in the affordable housing segment, 61% of the H2 2020 prices have attracted significant demand and are helping boost launches were in the INR sub-5 mn ticket size segment. The the sales momentum in the city, particularly since Q4 2020. increase in the share of launches in the INR 5 mn and above ticket sizes is largely a result of the increased need for larger homes to • As demand continued to remain strong in the ready-to-move- accommodate work from home and digital learning. in projects, unsold inventory numbers saw a 14% YoY dip from 14,149 units in H1 2020 to 12,190 units in H2 2020. Accordingly, • On the demand front, numbers have plunged by a staggering 49% the quarters to sell (QTS) also scaled down from 4.1 quarters in H1 YoY in 2020 recording a decadal low. Sales dipped significantly in 2020 to 3.81 quarters in H2 2020. Q2 2020 as lockdowns and COVID-induced market uncertainties such as job losses and pay cuts arrested business activity. Sales • The beginning of construction of the 119 km second phase of picked up speed in Q3 2020 on account of the pent-up demand of the Chennai metro in November 2020 is a welcome boost to the Q2 2020, and because of the new demand that was set in motion city’s infrastructure. Phase 2 covers three corridors – Corridor with restoration of economic activities. 3 from Madhavaram to Sipcot, Corridor 4 from Poonamallee to Light House and Corridor 5 from Madhavaram to Shollinganallur • Other factors contributing to the increase in demand include the – and will enhance inter-city connectivity. The Tamil Nadu state attractive mix of multi-decadal low home loan interest rates, low government has also been exploring options for the location of residential prices and higher household savings. These factors the proposed second Chennai international airport which will together pushed the fence-sitters to implement their home increase the city’s air-passenger and air-cargo handling capacity. purchase decisions in H2 2020.

• The demand for bigger homes has resulted in higher traction in the INR 10 mn and above ticket sizes. For the last few years, the affordable housing segment i.e. INR sub-5 mn ticket size has been the mainstay of residential demand in Chennai accounting for more than 50% of total sales. H2 2020 saw a trend reversal as the share of INR sub-5 mn sales in the total H2 2020 sales came down to 43% and that of the INR 5 mn and above went up to 57%.

54 INDIA REAL ESTATE - CHENNAI

CHENNAI RESIDENTIAL MARKET

Launches Sales Wt avg price (INR/sq m)

10000 50000

9000 48000 8000

46000 7000 % Dip2 in launches in H2 2020

6000 m INR/sq

No. of units No. 44000 compared to H2 2019

5000

42000 4000

3000 40000

2000 38000 1000

0 36000 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

CHENNAI AFFORDABLE MARKET ACTIVITY (upto INR 5 million segment)

6,000

5,000

4,000

No. of units No. 3,000

2,000

1,000

0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Sales in the INR 5 mn TICKET SIZE SPLIT OF SALES and above ticket sizes < INR 5 mn > INR 5 mn increased during H2 2020, a refreshing change in H2 2019 56% 44% the affordable housing- H2 2020 43% 57% dominated residential market of Chennai. Source: Knight Frank Research

55 Varadaiahpalem VITTAIAH PALEM Tada

Pudi

Raajula Kandriga Irakam

Arambakkam

Olluru Ramapuram Sricity

Kolladam Poovalai

Sunnambukulam Mangodu Edur Pallavada Tripuranthakapuram Elavur Kota Injur Annamalaicheri Chedilpakkam Manellore Natham

Vazhuthalambedu Jameelabad

Koppedu Karambedu GUMMIDIPOONDI INDIA REAL ESTATE - CHENNAI Ayanallur Thirupalaivanam INDIA REAL ESTATE - CHENNAI Pichatur Ramagiri Kannankottai

Verkadu Acharapallam Nagalapuram Arasur

Kollanur Keelambakam

Kavaraipettai Vengalathur Karungali Nindra Kattur Perumbedu Residential Peruvayal Sengarai Kaliambakam Arani Uthukkottai Nelvoy Kalanji Padiri Senganimedu Launches andT Sales i rup athi Athur Road Gangamambapuram Kaniyambakkam Pennalurpet SH-51 Chinnambedu Jagannadhapuram Launches Sales % ChangeThandalam (housing units) (housing units) (YOY) Katchur Goonipalayam Velakapuram Vadamadurai Thatchoor Chivada North Chennai Placepalayam Mamandoor Kannigaipair Poonimangadu Jaganathapuram Minjur 197 -16% 197 -66% Vijayapuram Seemapuram

215 -27% 2020 252 -57%

Vengal H2 2020 Thirukkandalam Kesavapuram Thumbikulam Nambakkam Meyyur Cholavaram Thirunilai Vallur Arungulam Guruvoyal

114 SH- Velliyur Nallur Arcod Poondi Ramanjeri Vichoor Nabalur Melanur Koduvalli Redhills

Pandeswaram SH -1 1 1 Thiruthani Pullarambakkam Valarpuram Kaverirajapuram Koyambakkam Morai New Vellanur Pattaraiperumbudur Ikkadu Pakkam S Kilambakkam H - 11 TIRUVALLUR Ichiputhur Thiruvalangadu Veeraraghavapuram Pattabiram Central Chennai Kilpakkam West Chennai Videiyur Thiruvur 283 -9% 283 -19% Kavanoor 1,398 1444% 2,960 102% Vyasapuram Perumalpattu AVADI

350 -23% 2020 406 -50% 2020 1,914 -12% 3,188 -23% Anna Nagar H2 2020 H2 2020 Panambakkam

Harichandrapuram Koppur Senji Nemam Seyyur Koyambedu

Erayamangalam Thirumazhisai Illuppur Nagavedu Perumuchi Uriyur Narasingapuram Nayapakkam Kalambakkam Sengadu Thakkolam Mangadu

Thandalam Adyar Om Mangalam Kallambedu Ulundai Malayambakkam Sayanapuram

Pudhukandigai Pennalur Thirumudivakkam SRIPERUMBUDUR Pallavaram Sayanavaram S Valathur H-109 Maduramangalam Somangalam Pullalur Amarambedu Sogandi Vadamangalam Thirumalpur Pondur Keeranallur Pudupakkam Pallur Medavakkam

Selaiyur Manimangalam Ariyambakkam Araneri Vallam Siruvakkam MICRO MARKET CLASSIFICATION Kuram South Chennai Kunnam Neervalur Micro market Vallakkottai Locations 1,836 -42% 3,794 -59% Attuputhur Vengambakkam Madurapakkam

Salamangalam 3,195 -37% 2020 4,807 -58% Enathur Marudham H2 2020 Central Chennai T. Nagar, Alandur, Nungambakkam, Kodambakkam, Kilpauk Kandigai Tenneri Sethupet Puthagaram Oragadam Mambakkam Siruseri KANCHIPURAM Potheri Vishar West Chennai Porur, Ambattur, Mogappair, Iyyappanthangal, SriperumbudurVengadamangalam 0 2 1 - Vippedu H S Ezhichur Nallambakkam Polacheri Nattapettai Nathanallur Perumbakkam, Chrompet, Sholinganallur,Kayarambedu Guduvancheri, Kelambak- South Chennai kam Villivalam Kelambakkam Kovalam Ayyangarkulam Avalur Kalur Maraimalai Thalimangalam Nagar Kannivakkam Thiruvidandhai North Chennai Tondiarpet, Kolathur, Madhavaram, Perambur Velichi Asoor Karambur Hariharapakkam Singaperumal Villiambakkam Koil Mamandur Source: Knight Frank Research Chithathur Kambarajapuram Kalvoy Ammapettai Thaiyur Arapakkam Pinayur Thiruporur

Mathur Magaral Hanumanthapuram Nemmeli Kunnavakkam Anjur Puthali Sirukundram Source:Edamachi Knight Frank Research Kavithandalam Malayankulam All maps are for representational purpose not to scale Akkur CHENGALPATTU Ukkal Senneri Meyyur Pattipulam Pulipakkam Porunthavakkam 56 Manampathy Perunagar Karunguzhipallam Mamandur Athi Thandarai Manamathy MAHABALIPURAM

Uttiramerur Rettamangalam Nedungal Visoor Paiyanur Pennalur Echur Kattupakkam Padalam Pulikundram

Melma Ega Arasar Koil Vedavakkam Sathamai Pattikadu Kokilamedu Mudaiyur Vengapakkam Soundaryapuram Melduli Kilnarma Esoor Karunguzhi Varadaiahpalem VITTAIAH PALEM Tada

Pudi

Raajula Kandriga Irakam

Arambakkam

Olluru Ramapuram Sricity

Kolladam Poovalai

Sunnambukulam Mangodu Edur Pallavada Tripuranthakapuram Elavur Kota Injur Annamalaicheri Chedilpakkam Manellore Natham

Vazhuthalambedu Jameelabad

Koppedu Karambedu GUMMIDIPOONDI INDIA REAL ESTATE - CHENNAI Ayanallur Thirupalaivanam Pichatur Ramagiri Kannankottai

Verkadu Acharapallam Nagalapuram Arasur

Kollanur Keelambakam

Kavaraipettai Vengalathur Karungali Nindra Kattur Perumbedu Residential Peruvayal Sengarai Kaliambakam Arani Uthukkottai Nelvoy Kalanji Padiri Senganimedu Unsold InventoryT i rup athi Athur Road Gangamambapuram Kaniyambakkam Pennalurpet Unsold inventory QTS (in Age of inventory SH-51 Chinnambedu Jagannadhapuram Thandalam (housing units) YoY change quarters) (in quarters)

Katchur Goonipalayam Velakapuram Vadamadurai Thatchoor Chivada Placepalayam Mamandoor Kannigaipair Poonimangadu Jaganathapuram Minjur Vijayapuram SeemapuramNorth Chennai Vengal Thirukkandalam Kesavapuram 484 4.4 Thumbikulam Nambakkam Meyyur Cholavaram Thirunilai Vallur Arungulam Guruvoyal -2% 14.9 H2 2020

114 SH- Velliyur Nallur Arcod Poondi Ramanjeri Vichoor Nabalur Melanur Koduvalli Redhills

Pandeswaram SH -1 1 1 Thiruthani Pullarambakkam Valarpuram Kaverirajapuram Koyambakkam Morai New Vellanur Pattaraiperumbudur Ikkadu Pakkam S Kilambakkam H - 11 TIRUVALLUR Ichiputhur Veeraraghavapuram Thiruvalangadu Pattabiram Kilpakkam Videiyur Thiruvur West Chennai Kavanoor Vyasapuram Perumalpattu AVADI 4,371 5.1 Anna Nagar Panambakkam 25% 15.1 Central Chennai H2 2020 Harichandrapuram Koppur 700 4.7 Senji Nemam Seyyur Koyambedu -23% 14.0

Erayamangalam Thirumazhisai H2 2020 Illuppur Nagavedu Perumuchi Uriyur Narasingapuram Nayapakkam Kalambakkam Sengadu Thakkolam Mangadu

Thandalam Adyar Om Mangalam Kallambedu Ulundai Malayambakkam Sayanapuram

Selaiyur Manimangalam Ariyambakkam Araneri Vallam Siruvakkam Kuram South Chennai Kunnam Neervalur Vallakkottai 6,636 3.2 Attuputhur Vengambakkam Madurapakkam -24% 16.0

Salamangalam H2 2020 Enathur Marudham Kandigai Tenneri Sethupet Puthagaram Oragadam Mambakkam Siruseri KANCHIPURAM Potheri Vishar Vengadamangalam

0 2 1 - Vippedu H S Ezhichur Nallambakkam Polacheri Nattapettai Nathanallur Kayarambedu

Villivalam Kelambakkam Kovalam Ayyangarkulam Avalur Kalur Maraimalai Thalimangalam Nagar Kannivakkam Thiruvidandhai Velichi Asoor Karambur Hariharapakkam Singaperumal Villiambakkam Koil Mamandur Chithathur Kambarajapuram Kalvoy Ammapettai Thaiyur Arapakkam Pinayur Thiruporur

Mathur Magaral Hanumanthapuram Nemmeli Kunnavakkam Anjur Puthali Sirukundram Source: EdamachiKnight Frank Research Kavithandalam Malayankulam All maps are for representational purpose not to scale Akkur CHENGALPATTU Ukkal Senneri Meyyur Pattipulam Pulipakkam Porunthavakkam 57 Manampathy Perunagar Karunguzhipallam Mamandur Athi Thandarai Manamathy MAHABALIPURAM

Uttiramerur Rettamangalam Nedungal Visoor Paiyanur Pennalur Echur Kattupakkam Padalam Pulikundram

Melma Ega Arasar Koil Vedavakkam Sathamai Pattikadu Kokilamedu Mudaiyur Vengapakkam Soundaryapuram Melduli Kilnarma Esoor Karunguzhi INDIA REAL ESTATE - CHENNAI INDIA REAL ESTATE - CHENNAI

Residential Pricing

Price range in H2 2020 6 month Micro Market Location 12 month Change in INR/sq m (INR/sq ft) Change

Anna Nagar 110,800–125,000 (10,200–11,600) -11% -6% Central Chennai Kilpauk 151,000–167,000 (14,000–15,500) -10% -5%

Kolathur 44,000–58,100 (4,100–5,400) -8% -4% North Chennai Perambur 61,400–70,000 (5,700–6,500) -9% -5%

Perumbakkam 43,000–48,400 (4,000–4,500) -9% -5% South Chennai Kelambakkam 34,400–42,000 (3,200–3,900) -10% -6%

Porur 54,900–61,400 (5,100–5,700) -8% -4% West Chennai Mogappair 64,600–72,100 (6,000–6,700) -7% -3%

Source: Knight Frank Research

The attractive mix of multi-decadal low home loan interest rates, low residential prices and higher household savings % are helping boost the sales Drop4 in prices in Q4 2020 compared momentum. to Q3 2020

58 INDIA REAL ESTATE - CHENNAI

Chennai Office Market

CHENNAI MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

New completions 0.3 (3.3) 91% 0.01 (0.1) -96% - -100% mn sq m(mn sq ft)

Transactions 0.4 (4.5) -13% 0.3 (3.2) -5% 0.2 (2.4) 227% mn sq m (mn sq ft)

Weighted average transacted rental INR/sq 645 (60) 0% - - - 0% m/month (INR/sq ft/month)*

Stock mn sq m (mn sq ft)* 7.1 (76.3) 5% - - - -

Vacancy (%)* 11.7% - - - - -

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Transactions mn sq m (mn sq ft) 0.1 (1.3) 0.01 (0.1) 0.07 (0.7) 0.2 (2.4)

Transactions as % of 2019 Quarterly average 98% 4% 57% 187%

New completions mn sq m (mn sq ft) 0.3 (3.3) - 0.01 (0.1) -

New Completions as % of 2019 Quarterly 750% 0% 15% 0% average

Source: Knight Frank Research

• Chennai’s office market has recorded a considerably healthy Commerzone with 0.1 mn sq m / 1.1 mn sq ft, totalling 0.3 mn sq 2020 despite the serious challenges presented by the ongoing m / 3.2 mn sq ft). For the H2 2020 period, however, there is a 96% COVID-19 pandemic this year. Demand maintained its 10-year YoY fall in new supply. annual average of 0.4 mn sq m (4.3 mn sq ft), supply saw a significant jump and rentals remained stable. • Supply had slowed down due to numerous COVID-induced challenges during the period April to September 2020. Stringent • New completions recorded a 91% Year-on-Year (YoY) growth this pan-India lockdowns during March and April 2020 brought all year driven primarily by two large office buildings going live in Q1 construction activity to a complete halt. Labour shortage and 2020 (Brigade WTC with 0.2 mn sq m / 2.1 mn sq ft and K Raheja high cost of inputs kept the construction activity in check until

59 INDIA REAL ESTATE - CHENNAI INDIA REAL ESTATE - CHENNAI

September 2020. As partial lockdowns continued in most cities, locking in office spaces in their desired markets for full-fledged fit-outs and getting Occupancy Certificates (OC) was a challenge operations when offices resume. This, coupled with the pent-up for ready buildings. Consequently, the planned new completions demand, has resulted in a strong demand momentum in H2 2020. saw significant alterations in their delivery timelines and this has impacted the supply inflow in the market in H2 2020. • Further, there has also been much talk about the hybrid model that global multi-national companies (MNCs) and IT players are • As of Q4 2020, the labour challenges have mostly been addressed gunning for in the post-vaccination world. In this hybrid model, and construction activity has picked up significant momentum. companies are planning to operate with a mix of employees Procedural delays have also reduced as government offices have working from home and in offices. However, owing to the started operations at full capacity. New supply plans are therefore newfound emphasis on social distancing and de-densification, back on track, albeit with a possible 8 to 9 month delay. the square feet area per employee has gone up and this in turn has kept the floorplate requirement of offices the same, though • On the transactions front, leasing activity maintained its for a lesser number of employees now. On the whole, in the post- decadal annual average with 0.4 mn sq m (4.5 mn sq ft) of COVID world, it appears that though the demand dynamics and transacted space in 2020. However, in terms of YoY performance, considerations might have changed, the quantum of demand is transactions were down 5% YoY in H2 2020 and 13% YoY in 2020. likely to remain the same. It is important to note here that 2019 was Chennai’s peak year in terms of demand. Leasing activity had recorded an all-time high • The Banking, Financial Services and Insurance (BFSI) sector’s of 0.3 mn sq m (3.35 mn sq ft) in H2 2019 and of 0.5 mn sq m (5.2 share in total transactions went up from 13% in H2 2019 to 22% in mn sq ft) in 2019. It is in comparison to this stellar performance of H2 2020 with a 60% YoY increase in total transacted area. On the last year that 2020 shows a 13% YoY dip in transaction activity. other hand, the share of manufacturing and co-working sector players in the total transactions pie of H2 2020 fell from 9% and • Also noteworthy is the fact that H2 2020 is the second highest 5% in H2 2019 to 3% and 2% in H2 2020, respectively. performing half-year period, after H2 2019, with 0.3 mn sq m (3.2 mn sq ft) of transactions activity recorded. The Chennai office • Within co-working players, enterprise model providers and market has therefore had a healthy leasing business this year and managed office operators have seen increase in activity in H2 the high demand momentum of last year has been muted only by 2020, particularly towards the latter part of Q4 2020. These the ongoing pandemic and the ensuing market uncertainties. companies are offering tenants the much desired flexibility in lease tenures, rentals and occupancy which has helped tenants • Q4 2020 transactions show a significant 227%% Quarter-on- maintain business continuity in these uncertain times. Further, Quarter (QoQ) jump and this spike is a function of increased the managed office solutions provided by some of the co-working business activity, transaction spill-overs from Q3 2020 and the players have seen significant demand in the last few months as market rush of locking in deals before the close of the calendar companies have been able to ensure hygiene requirements and year. social distancing norms by outsourcing the management of their facilities to these operators. These upcoming dimensions of co- • With respect to industry wise demand split, 58% of the H2 2020 working businesses are expected to help revive the co-working transactions were by Information Technology / Information sector demand in the coming quarters. Technology enabled Services (IT/ITeS) players, the primary driver of Chennai’s office market. This is an increase not just in terms of • In terms of location, the Suburban Business District (SBD) – Old the share, which was 53% in H2 2019, but also in terms of the total Mahabalipuram Road (OMR) micro market accounted for 63%, area transacted which is up by 4% YoY, from 0.16 mn sq m (1.8 the highest of the total H2 2020 transactions driven by the IT mn sq ft) in H2 2019 to 0.2 mn sq m (1.8 mn sq ft) in H2 2020. This sector companies that dominate this zone. In terms of the total growth in activity is noteworthy, as most of the IT/ITeS sector transacted area too, SBD-OMR saw a 186% YoY increase from 0.07 companies continue to adopt the work from home policy for a mn sq m (0.7 mn sq ft) in H2 2019 to 0.2 mn sq m (2.0 mn sq ft) in bulk of their employees. H2 2020.

• While most IT companies have temporarily made work from • Developers and landlords have mostly refrained from home arrangements for their employees, with news of the increasing rentals this year to accommodate the present market vaccine coming in, these companies have started looking for and uncertainties. This has helped developers in retaining present

60 INDIA REAL ESTATE - CHENNAI

tenants and also in giving a boost

to new business. Consequently, the CHENNAI MARKET SNAPSHOT rentals have remained stable this year with a marginal near 0% growth in the Completions Transactions

SBD-OMR business district driven by 0.35 increased transaction activity.

0.30 • Vacancy levels scaled down from 12.2%

in H1 2020 to 11.7% in H2 2020. The 0.25 addition of bulk supply, to the tune of

0.3 mn sq m (3.3 mn sq ft) in Q1 2020, 0.20 caused the vacancy level to rise from 8.8% in H2 2019 to 12.2% in H1 2020. 0.15

As of H2 2020, the supply addition of mn sq m Q1 2020 and a comparatively muted 0.10 demand momentum due to COVID, have kept the vacancy levels in double 0.05 digits.

0.00 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 • On the whole, while the total number

of deals in the Chennai office market Source: Knight Frank Research has come down from 103 in H2 2019 to 64 in H2 2020, the average deal size has considerably increased from 3,026 sq m (32,567 sq ft) to 4,620 sq m (49,732 CHENNAI OFFICE MARKET VACANCY sq ft). The jump in the average deal Vacancy size is a result of 9 large transactions (50,000 sq ft or 4,654 sq m and above) 14% accounting for 77% of the total H2 2020 transactions volume. 12%

10%

0% H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

61 Varadaiahpalem VITTAIAH PALEM Tada

Pudi

Raajula Kandriga Irakam

Arambakkam

Olluru Ramapuram Sricity

Kolladam Poovalai

Sunnambukulam Mangodu Edur Pallavada Tripuranthakapuram Elavur Kota Injur Annamalaicheri Chedilpakkam Manellore Natham

Vazhuthalambedu Jameelabad

Koppedu Karambedu GUMMIDIPOONDI INDIA REAL ESTATE - CHENNAI INDIA REAL ESTATE - CHENNAI Ayanallur Thirupalaivanam Pichatur Ramagiri Kannankottai

Verkadu Acharapallam Nagalapuram Arasur

Kollanur Keelambakam

Kavaraipettai Vengalathur Karungali Nindra Kattur BUSINESS DISTRICT CLASSIFICATION Perumbedu Peruvayal Sengarai Kaliambakam Arani Uthukkottai Nelvoy Kalanji Business district Micro markets Padiri Senganimedu Ti rup athi Athur Road Gangamambapuram Kaniyambakkam Pennalurpet SH-51 Chinnambedu Central Business District (CBD and off-CBD) Anna Salai, RK Salai, Nungambakkam, Greams Road, Egmore, T. NagarJagannadhapuram Thandalam

Katchur Suburban Business District (SBD) Mount-Poonamallee Road, Porur, Guindy, Nandanam Goonipalayam Velakapuram Vadamadurai Thatchoor Chivada Placepalayam Mamandoor Kannigaipair Poonimangadu Jaganathapuram Minjur SBD – Old Mahabalipuram Road (OMR) Perungudi, Taramani Vijayapuram Seemapuram

Vengal Peripheral Business District (PBD) – OMR and Thirukkandalam Kesavapuram OMR beyond Perungudi Toll Plaza, GST RoadThumbikulam Nambakkam Meyyur Grand Southern Trunk Road (GST) Cholavaram Thirunilai Vallur Arungulam Guruvoyal

114 PBD – Ambattur Ambattur SH- Velliyur Nallur Arcod Poondi Ramanjeri Redhills Vichoor Source: Knight Frank Research Nabalur Melanur Koduvalli

Anna Nagar Panambakkam

Harichandrapuram Koppur Senji Nemam SECTOR-WISE SPLIT OF TRANSACTIONS Seyyur Koyambedu Erayamangalam Thirumazhisai Illuppur Nagavedu Perumuchi Uriyur Narasingapuram Nayapakkam H2 2019 H2 2020 Kalambakkam Sengadu Thakkolam Mangadu 13% BFSI 22% Thandalam Adyar Om Mangalam 53% Information Technology 58% Kallambedu Ulundai Malayambakkam Sayanapuram 9% Manufacturing 3% Pudhukandigai Pennalur Thirumudivakkam SRIPERUMBUDUR Pallavaram Sayanavaram 5% Co-working 2% S Valathur H-109 Maduramangalam Somangalam Pullalur Amarambedu Vadamangalam Other Services Sogandi 20% 15% Thirumalpur Pondur Keeranallur Pudupakkam Pallur Medavakkam

Note: BFSI includes BFSI support services Selaiyur Manimangalam Source: Knight Frank Research Ariyambakkam Araneri Vallam Siruvakkam Kuram Kunnam Neervalur Vallakkottai

Attuputhur Vengambakkam Madurapakkam AVERAGE DEAL SIZE AND NUMBER OF DEALS Salamangalam Enathur Marudham Kandigai Tenneri Sethupet Puthagaram Oragadam Mambakkam Siruseri H2 2019 H2 2020 KANCHIPURAM Potheri Vishar Vengadamangalam

0 2 1 - Vippedu H S Ezhichur Nallambakkam Polacheri Nattapettai Nathanallur Kayarambedu

% Villivalam Kelambakkam Kovalam 3,026sq m 4,620 Ayyangarkulam Avalur 227Jump in transactions in Q4 2020 Maraimalai sq m Kalur Thalimangalam Nagar Kannivakkam Thiruvidandhai compared to Q3 2020 Velichi Asoor Karambur (32,567) (49,732) Hariharapakkam Singaperumal sq ft sq ft Villiambakkam Koil Mamandur Chithathur Kambarajapuram Kalvoy Ammapettai Thaiyur Arapakkam Pinayur 103 64 Thiruporur deals deals Mathur Magaral Hanumanthapuram Nemmeli Kunnavakkam Anjur Source: Knight Frank Research Puthali Sirukundram Edamachi Kavithandalam Malayankulam Akkur CHENGALPATTU Ukkal Senneri Meyyur Pattipulam 62 Pulipakkam Porunthavakkam Manampathy Perunagar Karunguzhipallam Mamandur Athi Thandarai Manamathy MAHABALIPURAM

Uttiramerur Rettamangalam Nedungal Visoor Paiyanur Pennalur Echur Kattupakkam Padalam Pulikundram

Melma Ega Arasar Koil Vedavakkam Sathamai Pattikadu Kokilamedu Mudaiyur Vengapakkam Soundaryapuram Melduli Kilnarma Esoor Karunguzhi Varadaiahpalem VITTAIAH PALEM Tada

Pudi

Raajula Kandriga Irakam

Arambakkam

Olluru Ramapuram Sricity

Kolladam Poovalai

Sunnambukulam Mangodu Edur Pallavada Tripuranthakapuram Elavur Kota Injur Annamalaicheri Chedilpakkam Manellore Natham

Vazhuthalambedu Jameelabad

Koppedu Karambedu GUMMIDIPOONDI INDIA REAL ESTATE - CHENNAI Ayanallur Thirupalaivanam Pichatur Ramagiri Kannankottai

Verkadu Acharapallam Nagalapuram Arasur

Kollanur Keelambakam

Kavaraipettai Vengalathur Karungali Nindra Kattur Perumbedu Office Transactions Peruvayal Sengarai Kaliambakam Arani H2 2020Uthukkottai Transactions 2020 Transactions Nelvoy Kalanji Padiri Senganimedu mn sq m (mn sq ft), YoY change mn sqTi m (mn sq ft), YoY change rup athi Athur Road Gangamambapuram Kaniyambakkam Pennalurpet SH-51 Chinnambedu Jagannadhapuram Thandalam

Katchur Goonipalayam Velakapuram Vadamadurai Thatchoor Chivada Placepalayam Mamandoor Kannigaipair Poonimangadu Jaganathapuram Minjur Vijayapuram Seemapuram

Vengal Thirukkandalam Kesavapuram Thumbikulam Nambakkam Meyyur Cholavaram Thirunilai Vallur Arungulam Guruvoyal

114 SH- Velliyur Nallur Arcod Poondi Ramanjeri Vichoor Nabalur Melanur Koduvalli Redhills

Pandeswaram SH -1 1 1 Thiruthani Pullarambakkam Valarpuram Kaverirajapuram Koyambakkam Morai New Vellanur Pattaraiperumbudur Ikkadu Pakkam S Kilambakkam H - 11 TIRUVALLUR PBD - Ambattur CBD Ichiputhur Veeraraghavapuram Thiruvalangadu Pattabiram Kilpakkam 0.007 (0.07) 0.02 (0.2) 0.02 (0.2) 0.03 (0.4) Videiyur Thiruvur 218% 2020 -50% -53% 2020 -47% Kavanoor H2 2020 H2 2020 Vyasapuram Perumalpattu AVADI

Anna Nagar Panambakkam

Harichandrapuram Koppur Senji Nemam Seyyur Koyambedu

Erayamangalam Thirumazhisai Illuppur Nagavedu Perumuchi Uriyur SBD Narasingapuram Nayapakkam 0.04 (0.4) 0.05 (0.5) Kalambakkam Sengadu Thakkolam Mangadu -19% 2020 -55% H2 2020

Thandalam Adyar Om Mangalam Kallambedu Ulundai Malayambakkam Sayanapuram SBD - OMR Pudhukandigai Pennalur Thirumudivakkam SRIPERUMBUDUR Pallavaram 0.2 (2.0) 0.2 (2.3) Sayanavaram

SH Valathur -109 2020 Maduramangalam Somangalam 186% 115% H2 2020 Pullalur Amarambedu Sogandi Vadamangalam Thirumalpur Pondur Keeranallur Pudupakkam Pallur Medavakkam

Selaiyur Manimangalam Ariyambakkam Araneri Vallam Siruvakkam Kuram Kunnam Neervalur Vallakkottai

Attuputhur Vengambakkam Madurapakkam Salamangalam Enathur Marudham Kandigai Tenneri Sethupet Puthagaram Oragadam Mambakkam Siruseri KANCHIPURAM Potheri Vishar Vengadamangalam

0 2 1 - Vippedu H S Ezhichur Nallambakkam Polacheri Nattapettai Nathanallur Kayarambedu

Villivalam PBD - OMR and GST RoadKelambakkam Kovalam Ayyangarkulam Avalur Kalur Maraimalai Thalimangalam Nagar Kannivakkam 0.04 (0.5) 0.1 (1.2) Thiruvidandhai Velichi Asoor

Karambur 2020 Hariharapakkam Singaperumal -72% -40% H2 2020 Villiambakkam Koil Mamandur Chithathur Kambarajapuram Kalvoy Ammapettai Thaiyur Arapakkam Pinayur Thiruporur

Mathur Magaral Hanumanthapuram Nemmeli Kunnavakkam Anjur Puthali Sirukundram Source:Edamachi Knight Frank Research Kavithandalam Malayankulam All maps are for representational purpose not to scale Akkur CHENGALPATTU Ukkal Senneri Meyyur Pattipulam Pulipakkam Porunthavakkam 63 Manampathy Perunagar Karunguzhipallam Mamandur Athi Thandarai Manamathy MAHABALIPURAM

Uttiramerur Rettamangalam Nedungal Visoor Paiyanur Pennalur Echur Kattupakkam Padalam Pulikundram

Melma Ega Arasar Koil Vedavakkam Sathamai Pattikadu Kokilamedu Mudaiyur Vengapakkam Soundaryapuram Melduli Kilnarma Esoor Karunguzhi Varadaiahpalem VITTAIAH PALEM Tada

Pudi

Raajula Kandriga Irakam

Arambakkam

Olluru Ramapuram Sricity

Kolladam Poovalai

Sunnambukulam Mangodu Edur Pallavada Tripuranthakapuram Elavur Kota Injur Annamalaicheri Chedilpakkam Manellore Natham

Vazhuthalambedu Jameelabad

Koppedu Karambedu GUMMIDIPOONDI INDIA REAL ESTATE - CHENNAI Ayanallur Thirupalaivanam INDIA REAL ESTATE - CHENNAI Pichatur Ramagiri Kannankottai

Verkadu Acharapallam Nagalapuram Arasur

Kollanur Keelambakam

Kavaraipettai Vengalathur Karungali Nindra Kattur Perumbedu Office Rental Peruvayal Sengarai Kaliambakam Arani Uthukkottai Nelvoy Kalanji Padiri Rental value range in H2 2020 in 12-month 6-month Senganimedu Ti rup INR/sq m/month (INR/sq ft/month) changeathi change Athur Road Gangamambapuram Kaniyambakkam Pennalurpet SH-51 Chinnambedu Jagannadhapuram Thandalam

Katchur Goonipalayam Velakapuram Vadamadurai Thatchoor Chivada Placepalayam Mamandoor Kannigaipair Poonimangadu Jaganathapuram Minjur Vijayapuram Seemapuram

Vengal Thirukkandalam Kesavapuram Thumbikulam Nambakkam Meyyur Cholavaram Thirunilai Vallur Arungulam Guruvoyal

114 SH- Velliyur Nallur Arcod Poondi Ramanjeri Vichoor Nabalur Melanur Koduvalli Redhills

Pandeswaram SH -1 1 1 Thiruthani Pullarambakkam Valarpuram Kaverirajapuram Koyambakkam Morai CBD PBDNew - Ambattur Vellanur Pattaraiperumbudur Ikkadu Pakkam S Kilambakkam H 700–1,023 - 301–377 1 0% 0% 0% 0% 1 (65–95) TIRUVALLUR (28–35) Ichiputhur Veeraraghavapuram Thiruvalangadu Pattabiram Kilpakkam Videiyur Thiruvur Kavanoor Vyasapuram Perumalpattu AVADI

Anna Nagar Panambakkam

Harichandrapuram Koppur SBD Senji Nemam Seyyur 592–861 Koyambedu 0% 0% Erayamangalam Thirumazhisai (55–80) Illuppur Nagavedu Perumuchi Uriyur Narasingapuram Nayapakkam Kalambakkam Sengadu Thakkolam Mangadu

Thandalam Adyar Om Mangalam Kallambedu Ulundai SBD - OMR Malayambakkam Sayanapuram 581–980 0% 0% (54–91) Pudhukandigai Pennalur Thirumudivakkam SRIPERUMBUDUR Pallavaram Sayanavaram S Valathur H-109 Maduramangalam Somangalam Pullalur Amarambedu Sogandi Vadamangalam Thirumalpur Pondur Keeranallur Pudupakkam Pallur Medavakkam

Selaiyur Manimangalam Ariyambakkam Araneri Vallam Siruvakkam Kuram Kunnam Neervalur Vallakkottai

Attuputhur Vengambakkam Madurapakkam Salamangalam Enathur Marudham Kandigai Tenneri Sethupet Puthagaram Oragadam Mambakkam Siruseri KANCHIPURAM Potheri Vishar Vengadamangalam

0 2 PBD - OMR and GST Road 1 - Vippedu H S Ezhichur Nallambakkam Polacheri 280–430 Nattapettai Nathanallur Kayarambedu 0% 0% (26–40)

Mathur Magaral Hanumanthapuram Nemmeli Kunnavakkam Anjur Puthali Sirukundram Source:Edamachi Knight Frank Research Kavithandalam Malayankulam All maps are for representational purpose not to scale Akkur CHENGALPATTU Ukkal Senneri Meyyur Pattipulam Pulipakkam Porunthavakkam 64 Manampathy Perunagar Karunguzhipallam Mamandur Athi Thandarai Manamathy MAHABALIPURAM

Uttiramerur Rettamangalam Nedungal Visoor Paiyanur Pennalur Echur Kattupakkam Padalam Pulikundram

Melma Ega Arasar Koil Vedavakkam Sathamai Pattikadu Kokilamedu Mudaiyur Vengapakkam Soundaryapuram Melduli Kilnarma Esoor Karunguzhi Varadaiahpalem VITTAIAH PALEM Tada

Pudi

Raajula Kandriga Irakam

Arambakkam

Olluru Ramapuram Sricity

Kolladam Poovalai

Sunnambukulam Mangodu Edur Pallavada Tripuranthakapuram Elavur Kota Injur Annamalaicheri Chedilpakkam Manellore Natham

Vazhuthalambedu Jameelabad

Koppedu Karambedu GUMMIDIPOONDI Ayanallur Thirupalaivanam INDIA REAL ESTATE - CHENNAI Pichatur Ramagiri Kannankottai

Verkadu Acharapallam Nagalapuram Arasur

Kollanur Keelambakam

Kavaraipettai Vengalathur Karungali Nindra Kattur Perumbedu Peruvayal Sengarai Kaliambakam Arani Uthukkottai Nelvoy Kalanji Padiri T Senganimedu iru pat Data Centres, the emerging hi Athur Road Gangamambapuram Kaniyambakkam Pennalurpet SH-51 Chinnambedu Jagannadhapuram Thandalam

Katchur Goonipalayam Velakapuram Vadamadurai Thatchoor Chivada Placepalayam Mamandoor asset class in Chennai Kannigaipair Poonimangadu Jaganathapuram Minjur Vijayapuram Seemapuram

Vengal Thirukkandalam Kesavapuram Thumbikulam Nambakkam Meyyur -PRADNYA NERKAR Cholavaram Thirunilai Vallur Arungulam Guruvoyal ASSOCIATE CONSULTANT - RESEARCH

114 SH- Velliyur Nallur Arcod Poondi Ramanjeri Vichoor Nabalur Melanur Koduvalli Redhills

Anna Nagar Panambakkam

Harichandrapuram Koppur Senji Nemam Seyyur Koyambedu

Erayamangalam Thirumazhisai Illuppur Nagavedu Perumuchi Uriyur Narasingapuram Nayapakkam Kalambakkam Sengadu Thakkolam Mangadu

Thandalam Adyar Om Mangalam Kallambedu Ulundai Malayambakkam Sayanapuram

Selaiyur Manimangalam Ariyambakkam Araneri Vallam Siruvakkam Kuram Kunnam Neervalur Vallakkottai he increased pace of digitisation and the significant growth area not prone to floods). Further, data centres are resource heavy, Attuputhur Vengambakkam Madurapakkam Salamangalam in data consumption enforced by the ongoing COVID-19 as they require a continuous supply of enormous amounts of high- Enathur Marudham Kandigai pandemic has resulted in an increased demand for data quality electricity and high-scale availability of network connectivity. Tenneri Sethupet T Puthagaram 1 Oragadam Mambakkam Siruseri KANCHIPURAM Potheri centres . India’s data usage has seen a significant rise after March Chennai sufficiently fulfills all such specific real estate and Vishar Vengadamangalam

0 2020 and this increase can be attributed to remote working/work infrastructural requirements of data centres and has thus emerged as 2 1 - Vippedu H S Ezhichur Nallambakkam Polacheri from home policy, online education, boom in e-commerce and the second largest data centre market in India. Nattapettai Nathanallur Kayarambedu app-based services, increase in usage of social media and higher Villivalam Kelambakkam Kovalam Ayyangarkulam Avalur Kalur Maraimalai Over The Top (OTT) consumption. The high data volume coupled India’s data centre market has grown manifold in the last five years Thalimangalam Nagar Kannivakkam Thiruvidandhai Velichi Asoor Karambur with government regulations on data localisation and data privacy backed by the increasing market of mobile and internet users in Hariharapakkam Singaperumal Villiambakkam Koil Mamandur protection caused a growth spurt in data centres within India. As an the country. Within India, Mumbai and Chennai are the two most Chithathur Kambarajapuram Kalvoy Ammapettai Thaiyur asset class, data centres have very specific real estate requirements preferred locations for setting up data centres as both these cities Arapakkam Pinayur Thiruporur such as presence in low calamity risk zones (i.e. low seismic zone or have under-sea or submarine international cable landing stations2. Mathur Magaral Hanumanthapuram Nemmeli Kunnavakkam Anjur Puthali Sirukundram Edamachi Kavithandalam Malayankulam Akkur CHENGALPATTU Ukkal Senneri Meyyur Pattipulam Pulipakkam Porunthavakkam Manampathy 65 Perunagar Karunguzhipallam Mamandur Athi Thandarai Manamathy MAHABALIPURAM

Uttiramerur Rettamangalam Nedungal Visoor Paiyanur Pennalur Echur Kattupakkam Padalam Pulikundram

Melma Ega Arasar Koil Vedavakkam Sathamai Pattikadu Kokilamedu Mudaiyur Vengapakkam Soundaryapuram Melduli Kilnarma Esoor Karunguzhi INDIA INDIAREAL REALESTATE ESTATE - CHENNAI INDIA REAL ESTATE

Key advantages of Chennai as a location for setting up data centres

- Submarine international cable landing stations – At present, Chennai has four undersea cable landing stations that offer sound optic fiber network connectivity3.

- Chennai is geographically the closest in India to the South-East Asia region thus facilitating easy international connectivity.

- Being a coastal location, it also ensures further scope of building new cable landing stations in the future.

- Tamil Nadu is a power surplus state and therefore Chennai offers uninterrupted and quality power supply.

- Easy availability of land and industrial parks in and around Chennai.

- Affordable real estate costs, especially when compared to Mumbai.

- Large presence of IT sector.

- Availability of required technical expertise and skilled manpower.

- Enabling policy environment and incentives to boost growth: While the Tamil Nadu state data centre policy is in the drafting stage, the government also has a few state data centres up and running. Further, the government has always encouraged IT infrastructure growth in the state.

Chennai’s data centre market is presently estimated to be at a In line with the present demand and supply trend, the Chennai capacity of around 70 MW which occupies approximately 2 mn sq ft data centre market is estimated to grow to a capacity of 174 MW by of real estate space (built-up area)4. With a large IT office market base, 2023 i.e. more than double in three years4. Investments worth INR hyperscalers and large enterprises that prefer Tier IV5 compliant data 120 bn have already been announced by six players during April- centres are the primary demand drivers in Chennai. Further, both the October 2020. The proposed National Data Centre Policy will further main data centres and the disaster recovery centres i.e. data back-up boost data centre growth in the city, as proposals such as granting bases exist in the city. Within Chennai, the Ambattur and Siruseri ‘infrastructure’ status, setting up Data Centre Economic Zones micro markets have evolved into data centre and cloud hotspots, and (DCEZs) and providing single-window clearance are on the cards. key national and international players such as Netmagic, Adani and These, coupled with the impending roll-out of 5G technology, will Yotta have established their base in the city. strengthen the data centre growth trend in Chennai.

1Data centres are dedicated, centralized spaces (a room or a building or a group of buildings) where computing and networking equipment is housed for collecting, storing, processing and disseminating data.

2A submarine cable landing station helps accommodate and service the undersea data traffic coming in from the Pacific side. Intercontinental cables terminate at a cable landing point and network services then help carry the data further for dissemination or for termination into a data centre.

3https://www.submarinenetworks.com/stations/asia/india

4Knight Frank

5Data centre tiers are a system used to describe specific kinds of data centre infrastructure in a consistent way. Tier 1 is the simplest infrastructure, while Tier 4 is the most complex, completely fault tolerant and has the most redundant components.

66 INDIA REALINDIA ESTATE REAL ESTATE - HYDERABAD

HYDERABAD RESIDENTIAL AND OFFICE MARKET

67 INDIAINDIA REAL REAL ESTATE ESTATE - HYDERABAD - HYDERABAD INDIA REAL ESTATE - HYDERABAD

Samson Arthur Branch Director - Hyderabad

elcome to Hyderabad! A city where charming rich Managed Office Operators came to the rescue of serious office-takers heritage converges with new-age vibrancy. Over the last who awaited sweet deals. With ease of capital investment on fitouts, Wtwo decades, Information Technology (IT) has continued flexible contract terms and bundled offering on operational needs, to be the key driver of growth, both for the city and its real estate. operators served the needs of both developers and occupiers equally. Markets saw a strong Q1 until the pandemic made it difficult to make Flexibility is likely to be the order of the day even when offices any predictions. Yet, by the end of year we are witnessing a resilience resume fully. in office rentals and a strong Q4 in housing. WAREHOUSING HOUSING Warehousing remained an active sector right through the lockdown. COVID has made homes dearer and city developers have responded Fast moving consumer goods (FMCG) and Third-party Logistics with measured aggression to tap on the prevalent aspiration and (3PLs) providers, driven primarily by ecommerce, absorbed most of future demand. Recognised as being amongst the most affordable the ready spaces. Larger firms consolidated their BTS (Build To Suit) cities, this sector saw a remarkable turnaround in Q3. Ready plans for 2021-22. Active interest was seen for clusters of Medchal, inventory moved briskly, encouraging developers to announce new Patancheru and Shamshabad. launches which in turn met with positive outcomes. INFRASTRUCTURE OFFICE With the Growth in Dispersion (GRID) policy intending to support Hyderabad’s rank in all-India office transactions jumped from sixth geographical growth, both the industry and the government have to place in 2015 to second place in 2019 with a record volume of 12.8 mn walk the path to enjoy its fruits collectively. The announcement of sq ft transacted. Integrated Township Policy envisions decongesting of the core city to build satellite townships 5 kms outside of the Outer Ring Road Post lockdown, rentals have remained resilient and office demand (ORR). Dharani Portal for online land digitization and bPass for is seeing a gradual shift from one of muted stance to recalibration single window clearance are landmark initiatives with unparalleled of right-size, albeit with smaller volume. Developers responded potential. Policies have been progressive; they now await successful with softening of terms as a retention tool. High, expansionary pre- implementation. commitments of previous year took a backseat during the peak of lockdown. Enterprising clients however, held on to their prime space The outlook remains promising for Hyderabad’s realty. The with hard commitments, in view of limited ready space in the prime office segment got a booster with Goldman Sachs announcing its corridors of Raidurg & HITEC City. Work from Home (WFH) was Hyderabad entry during COVID. With the presence of Amazon’s Data adopted immediately and gave IT companies an opportunity to focus Centre, inquiries in this sector have also been increasing. New sectors on their core area which continued to grow well. WFH productivity such as the automotive and electric vehicles segments show great however, will be challenged once normalcy returns, with employees promise. There is good reason why #WorkFromHyderabad (WFH) demanding a balanced work-live-play environment. continues to look optimistic.

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Hyderabad Residential Market

HYDERABAD MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 CHANGE (YOY) H2 2020 Q4 2020 CHANGE (YOY) CHANGE (QOQ)

Launches 12,826 - 5% 8,404 4% 7,170 481% (housing units)

Sales 10,042 -38% 5,260 -34% 3,651 127% (housing units)

Price 48,535/sq m 0% - - - - (wt avg)* (4,509/sq ft)

Unsold inventory 7,180 63% - - - - (housing units)*

Quarters to sell* 2.2 - - - - -

Age of unsold inventory 11.5 - - - - - (in quarters)*

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Sales (housing units) 3,808 974 1,609 3,651

Sales as % of 2019 Quarterly average 94% 24% 40% 90%

Launches (housing units) 3,002 1,420 1,234 7,170

Launches as % of 2019 Quarterly average 89% 42% 37% 213%

Source: Knight Frank Research

• Driven by the strong office market growth, Hyderabad’s as they recorded only 42% and 37% launches respectively, of residential market had performed well in the past three to four the 2019 quarterly average. During March-April 2020, stringent years. Prices had grown at a Compounded Annual Growth Rate lockdowns halted construction activity and then from May- (CAGR) of 6% during 2014-2019. This growth momentum and the October 2020 challenges such as shortage of labour, high input overall residential market performance was hampered by the costs and low demand kept new supply in check. onset of the pandemic in Q1 2020. • By Q4 2020, with sales also picking up momentum, launches • New project launches took a significant hit in Q2 and Q3 2020, revived with full gusto. Launches grew by a stellar 481% Quarter-

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on-Quarter (QoQ) in Q4 2020 leading to a 4% Year-on-Year (YoY) • The strong growth momentum of residential prices during earlier growth in the total H2 2020 launches. years was stalled this year by the negative impact of the pandemic on both sales and launches. As a result, the weighted average • With respect to ticket sizes, as the rate of conversion from prices at the city level have receded to the 2019 levels with a near inquires to purchases picked up in the affordable housing 0% YoY increase in 2020. Steady prices in an otherwise strong segment, launches in the INR sub-5 mn ticket size units grew demand market are likely to incentivise homebuyers in executing by 45% YoY in H2 2020. Similarly, launches in the INR 10 – INR their purchase decisions sooner. 20 mn ticket size grew by 55% YoY in H2 2020, on account of the COVID-induced need for larger homes. • The spurt in launches coupled with the relatively muted sales volume have caused the unsold inventory numbers to rise • On the demand front, numbers have plummeted by a significant 63% YoY from 4,397 units in H2 2019 to 7,180 units in H2 2020. 38% YoY in 2020 recording a decadal low in annual sales. Sales Accordingly, the quarters to sell (QTS) has also scaled up from 1.1 dipped significantly in Q2 2020 as lockdowns and COVID- quarters in H2 2019 to 2.2 quarters in H2 2020. induced market uncertainties, such as job losses and pay cuts, stalled business activity pan-India, including Hyderabad. Sales revived marginally in Q3 2020 on account of the pent-up demand and because of the new demand set in motion with restoration of business activities. Q4 2020 sales grew by 127% QoQ; however, the total H2 2020 sales numbers still fell short by 34% YoY of the H2 2019 sales numbers.

• Key contributors to the increase in demand in H2 2020, particularly Q4 2020, include the festive season offers and discounts and the COVID-induced push for bigger and larger homes to accommodate the ongoing work from home and digital learning arrangements. There is also the attractive mix of multi- decade low home loan interest rates, low residential prices, and higher income savings.

• Attractive prices and interest rates have also boosted sales in the INR sub-5 mn ticket size segment in H2 2020, as their share in total sales increased from 15% in H2 2019 to 24% in H2 2020. This increase is noteworthy, as it indicates the growth of the affordable housing segment in a market where the buyer preference has always been stronger for the INR 5 – INR 10 mn segment.

• In terms of geography, the Hyderabad Metropolitan Region (HMR) – Central micro market was popular with both launches and sales in H2 2020. HMR-Central launches grew by 397% YoY in 2020, whereas its 2020 sales were relatively less affected at 19% YoY. Jubilee Hills continued to remain a preferred home destination while Shaikpet, Attapur and Somajiguda neighbourhoods saw increased activity during H2 2020. West Hyderabad continued to account for the highest share in launches, as well as sales, owing to its proximity to the Information Technology (IT) business districts. Serilingampally, % 481Jump in launches in Q4 2020 Patancheru, Miyapur, Narsingi, Bachupally and Malkajgiri compared to Q3 2020 localities were among the other popular catchments during H2 2020.

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HYDERABAD RESIDENTIAL MARKET

Launches Sales Wt avg price (INR/sq m)

10000 50000

9000 48000 8000

46000 7000 % 127Increase in sales in Q4 2020

6000 m INR/sq

No. of units No. 44000 compared to Q3 2020

5000

42000 4000

3000 40000

2000 38000 1000

0 36000 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

HYDERABAD AFFORDABLE MARKET ACTIVITY (upto INR 5 million segment)

3,000

2,500

2,000

1,500 No. of units No. The share of INR sub-5 mn

1,000 ticket size sales in total H2 2020 sales has increased 500 from 15% in H2 2019 to

0 24% in H2 2020. This H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 increase is noteworthy as it indicates the TICKET SIZE SPLIT OF SALES growth of the affordable

< INR 5 mn > INR 5 mn housing segment in a market where the buyer 76% H2 2020 24% preference has always

H2 2019 15% 85% been stronger for the INR 5 – INR 10 mn segment.

Source: Knight Frank Research

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Residential Launches and Sales

Launches Sales % Change (housing units) (housing units) (YOY)

HMR - North

1,629 17% 2,392 14%

949 -26% 2020 1,721 -46% H2 2020

Quthbullapur Madinaguda Kukatpally

Serilingampally

Kondapur

HMR - West Hitec City HMR - CentralBegumpet 6,249 31% 8,860 71% Madhapur Gachibowli 317 342% 357 397%

3,141 -32% 2020 5,942 -40%

H2 2020 Ameerpet 345 -34% 2020 658 -19% H2 2020

Jubliee Hills HMR - East Nanakramguda -92% -37% Banjara 80 647 Manikonda Hills

555 -41% 2020 1,123 -16% H2 2020 Kokapet Uppal

MICRO MARKET CLASSIFICATION

Micro market Locations L B Nagar

HMR – Central Begumpet, Banjara Hills, Jubilee Hills, Panjagutta, Somajiguda

HMR – West Kukatpally, Madhapur, Kondapur, Gachibowli, Raidurgam, Kokapet Rajendra Nagar

HMR – East Uppal, Malkajgiri, LB Nagar HMR - South

HMR – North Kompally, Medchal, Alwal, Quthbullanpur 129 -84% 570 -72%

271 -50% 2020 598 -46% H2 2020 HMR – South Rajendra Nagar, Shamshabad

Shamshabad

*HMR stands for Hyderabad Metropolitan Region Source: Knight Frank Research

Source: Knight Frank Research All maps are for representational purpose not to scale

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Residential Unsold Inventory

Unsold inventory QTS (in Age of inventory (housing units) YoY change quarters) (in quarters)

HMR - North

1,109 1.8

85% 15.0 H2 2020

Quthbullapur Quthbullapur Madinaguda Madinaguda Kukatpally Kukatpally

Serilingampally Serilingampally

Kondapur Kondapur

Hitec City Hitec City Begumpet Begumpet Madhapur Madhapur Gachibowli HMRGachibowli - West HMR - East Ameerpet 4,325 2.2 Ameerpet HMR - Central 669 2.2 Jubliee Hills 74% 9.4 Jubliee Hills 2.2

H2 2020 411 Nanakramguda Nanakramguda 54% 12.8 65% 9.0 H2 2020 Banjara Banjara H2 2020 Manikonda Manikonda Hills Hills

Uppal Kokapet Uppal Kokapet

L B Nagar L B Nagar

Rajendra Nagar Rajendra Nagar

HMR - South

666 3.1

7% 19.4 H2 2020 Shamshabad Shamshabad

Source: Knight Frank Research All maps are for representational purpose not to scale

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Residential Pricing

Price range in H2 2020 6 month Micro Market Location 12 month Change in INR/sq m (INR/sq ft) Change

Banjara Hills 108,716-112,634 (10,200-10,600) 2% -4% HMR - Central Jubilee Hills 118,296-119,373 (10,990-11,090) 1% -3%

LB Nagar 44,132-48,007 (4,100-4,460) 2% -5% HMR - East Nacharam 40,451-42,938(3,578-3,989) 1% -4%

Kompally 35,650-35,790 (3,312-3,325) -2% -2% HMR - North Sainikpuri 29,063-29,999 (2,700-2,787) -1% -2%

Rajendra Nagar 51,990-53,583 (4,830-4,978) -1% -4% HMR - South Bandlaguda 42,819-45,575 (3,978-4,234) -2% -3%

Kokapet 52,173-55,854 (4,847-5,189) 1% -3% HMR - West Manikonda 47,254-48,266 (4,390-4,484) 0% -2%

Source: Knight Frank Research

The spurt in launches coupled with the relatively muted sales volume have caused the unsold inventory numbers to rise % to 7,180 units in H2 2020. 0.2Near-zero growth in city level weighted average residential prices in 2020.

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Hyderabad Office Market

HYDERABAD MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

Completions 0.8 (8.7) -20% 0.4 (4.9) -29% 0.1 (1.3) -64% mn sq m(mn sq ft)

Transactions 0.6 (6.0) -53% 0.4 (3.8) -58% 0.3 (3.3) 640% mn sq m (mn sq ft)

Weighted average transacted rental INR/sq 658 (61) 0% - - - -1% m/month (INR/sq ft/month)*

Stock mn sq m (mn sq ft)* 7.8 (83.9) 11% - - - -

Vacancy (%)* 9.4% - - - - -

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Transactions mn sq m (mn sq ft) 0.2 (2.2) - 0.04 (0.5) 0.3 (3.3)

Transactions as % of 2019 Quarterly average 68% - 14% 104%

New completions mn sq m (mn sq ft) 0.02 (0.2) 0.3 (3.6) 0.3 (3.6) 0.1 (1.3)

New Completions as % of 2019 Quarterly 8% 131% 132% 48% average

Source: Knight Frank Research

• Hyderabad’s office real estate market had been delivering a last two to three years. stellar performance since the last two years. In 2019, the annual leasing volumes recorded an all-time high of 1.2 mn sq m (12.8 • The demand continued to remain strong in the first quarter of mn sq ft) and climbed up to the second position in All India (All 2020 until the global pandemic hit India and the country adopted India includes the 8 cities, viz. Ahmedabad, Bengaluru, Chennai, stringent lockdowns and cautionary measures that expectedly Hyderabad, Kolkata, Mumbai, National Capital Region - NCR and impacted business activity. Pune) office leasing numbers. This robust demand momentum was well-supplemented by bulk addition of new supply in 2019 • New completions stand at 0.8 mn sq m (8.7 mn sq ft) in 2020, and was reflected in the strong growth in office rentals over the a 20% Year-on-Year (YoY) fall. It is important to note here that

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annual new completions numbers have been consistently indicative of a considerable recovery in the impeded demand below 0.5 mn sq m (6.0 mn sq ft) in the last decade, except for momentum. the outstanding 1 mn sq m (10.8 mn sq ft) recorded in 2019. It is in comparison to this outstanding supply number of last • Pre-commitments account for 21%, i.e. 0.1 mn sq m (1.3 mn sq ft) year that 2020’s 0.8 mn sq m (8.7 mn sq ft) is showing a 20% of the total transactions volume in 2020. fall. Otherwise, this year stands to be the second highest in annual new completions in the last 10 years and is much higher • With respect to the industry wise demand split, 49% of the H2 than the decadal average of 0.4 mn sq m (4.6 mn sq ft). This 2020 transactions were by Information Technology / Information is a commendable feat given the numerous COVID-induced Technology Enabled Services (IT/ITeS) players, the primary driver challenges that the market was weathering. of Hyderabad’s office market. This is a drop in terms of not just the share, which was 58% in H2 2019, but also in terms of the total • Supply had slowed down during Q2 and Q3 2020. Pan-India area transacted, which is down by a substantial 64% YoY from lockdowns during March and April 2020 brought all construction 0.4 mn sq m (5.2 mn sq ft) in H2 2019 to 0.1 mn sq m (1.8 mn sq ft) activity to a complete halt. Labour shortage and high cost of in H2 2020. This sharp fall in IT sector office space consumption inputs kept the construction activity constrained until September can be attributed to the pandemic-induced wait-and-watch 2020. As partial lockdowns continued in most cities, fit-outs and policy that most companies had adopted during 2020. Business getting Occupancy Certificates (OC) was a challenge for ready continuity was managed through work from home arrangements buildings. It is despite these challenges that Hyderabad’s office for employees but these had their own challenges. market maintained its supply momentum in 2020. • With the news of the vaccine coming, these companies have • Labour challenges and procedural delays have been mostly started looking for and locking in office spaces in their desired addressed as of Q4 2020 and construction activity has picked markets for when offices shall resume full-fledged operations. up significant momentum. This has further boosted the supply The spike in transaction activity seen in Q4 2020 is, in part, an momentum in the market. outcome of this trend.

• On the transactions front, annual leasing activity was down • There has also been news of a hybrid model of working coming 53% YoY in 2020 with 0.6 mn sq m (6.0 mn sq ft) of office space into play in the post-vaccination world. A hybrid model is where transacted. Transaction volumes have fallen to the 2016- companies will operate with a mix of employees working from 2017 levels owing mainly to the pandemic-induced business home and in offices. This posited arrangement will have no disruptions and market uncertainties. significant impact on the demand quantum of occupiers, as the newfound emphasis on social distancing and de-densification • After a remarkable performance last year, office space demand will increase the square feet area per employee and this in turn continued to remain strong in Q1 2020 with 0.2 mn sq m (2.5 will keep the floorplate requirement of offices the same, just mn sq ft) of transactions estimated in this period. This strong for lesser number of employees. Thus, it appears that demand demand momentum was severely hampered by the outbreak dynamics and considerations might change in the post-COVID of the pandemic in India in March 2020. Lockdowns and world but the quantum of demand is most likely to remain the market uncertainties pushed occupiers to put their lease plans same. on hold and even led some to cancel their pre-commitments. Consequently, by the end of H1 2020, only 0.2 mn sq m (2.2 mn sq • On a positive note, the share of Banking, Financial Services and ft) of transaction activity was recorded. Insurance (BFSI) sector in total transactions went up from 4% in H2 2019 to 20% in H2 2020, which is also a 248% YoY increase in • Resumption of economic activities revived office demand to total transacted area. This increase is a result of two large BFSI some extent in Q3 2020. Further, in Q4 2020, transactions show a deals that together account for 0.1 mn sq m (1 mn sq ft) of the total significant 640% Quarter-on-Quarter (QoQ) jump, and this spike leasing activity in H2 2020. is a function of increased business activity, transaction spill-overs from Q3 2020 and the market rush of locking in deals before the • Besides the IT sector, the share of manufacturing and co-working close of the calendar year. The Q4 2020 demand spike is also sector players in the total transactions pie of H2 2020 has also

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fallen sharply. In terms of transacted area, these sectors show a • On the infrastructure front, the Telangana state government sizeable 72% and 75% YoY dip respectively. Both these declines launched multiple initiatives in 2020, particularly during the can be pre-dominantly attributed to the pandemic, as the second half of the year. The government has taken a two-pronged manufacturing sector was a victim of slow business momentum, approach to address the issues of infrastructure overload and whereas co-working players were impacted by social distancing congestion in the city – first is to improve public transport and safety concerns. infrastructure within the city to ensure smooth connectivity via different modes, and the second is to encourage development • An upcoming trend that warrants a mention here is the increasing of self-contained, integrated townships in the suburbs to avoid demand for managed office operators, especially since the latter unnecessary city travel. For the first part, the government has half of Q4 2020. Managed office solutions, mostly provided by undertaken measures such as the Strategic Road Development co-working players, help companies outsource their hygiene Plan (SRDP), the Metro Rail project and the Elevated Bus Corridor requirements, social distancing norms and other such operational project. For the second part, the government has announced the needs. This upcoming dimension of co-working businesses is Integrated Township Policy (ITP) and the Growth in Dispersion expected to help revive the co-working sector demand in the (GRID) policy. These proactive steps taken by the government are coming quarters. likely to give a boost to the city’s infrastructure and help attract occupiers to other parts of the city. • Suburban Business District (SBD) with its Hyderabad Information Technology and Engineering Consultancy (HITEC) City continued its dominance with a sizeable 83% demand share, the highest, in the total H2 2020 transactions pie. The second highest share i.e. 16% was accounted for by the Peripheral Business District (PBD) West. Accordingly, West Hyderabad alone accounted for 99% of the total H2 2020 transactions volume which is indicative of the strong occupier preference for this location in the city. The Telangana government’s Growth in Dispersion (GRID) policy announced in 2020 aims at diversifying occupier interest in other zones of the city to maintain a developmental balance.

• The weighted average transacted rentals have stabilised at 2019 levels this year with a near 0% YoY growth in annual rents and mainly driven by SBD transaction activity. Steady rentals in an otherwise strong demand market are likely to incentivise occupiers to execute their pending and planned office space deals earlier.

• Vacancy levels scaled up from 7% in H2 2019 to 9.4% in H2 2020 on account of high quantum of supply infusion and a much- muted transaction volume.

• On the whole, while the total number of deals in the Hyderabad office market has come down substantially from 112 in H2 2019 to 39 in H2 2020, the average deal size has increased by 22% YoY % from 7,403 sq m (79,865 sq ft) to 9,063 sq m (97,554 sq ft). Large 640Jump in transactions in Q4 2020 transactions (50,000 sq ft or 4,654 sq m and above) account for compared to Q3 2020 45% of the total number of H2 2020 transactions causing the jump in the average deal size and indicating an increase in the average floorplate requirement of occupiers.

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HYDERABAD MARKET SNAPSHOT

Completions Transactions

0.9

0.8 0.7 % 0.6 0.2Near-zero increase in city level weighted average transacted rentals 0.5 in 2020

0.4 mn sq m 0.3

0.2

0.1

0.0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

HYDERABAD OFFICE MARKET VACANCY

Vacancy

10%

0% H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

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BUSINESS DISTRICT CLASSIFICATION

Business district Micro markets

Banjara Hills, Jubilee Hills, Begumpet, Ameerpet, Somajiguda, Himayat Nagar, Raj Central Business District (CBD and off CBD) Bhavan Road, Punjagutta

Suburban Business District (SBD) HITEC City, Kondapur, Manikonda, Kukatpally, Raidurg

Peripheral Business District (PBD) West Gachibowli, Kokapet, Madinaguda, Nanakramguda, Serilingampally

Peripheral Business District (PBD) East Uppal, Pocharam

Source: Knight Frank Research

SECTOR-WISE SPLIT OF TRANSACTIONS

H2 2019 H2 2020

4% BFSI 30%

58% Information Technology 49%

12% Manufacturing 8%

15% Co-working 9%

10% Other Services 3%

Note: BFSI includes BFSI support services Source: Knight Frank Research

AVERAGE DEAL SIZE AND NUMBER OF DEALS

H2 2019 H2 2020 % 7,403sq m 9,063 248Increase in BFSI sector transactions sq m (79,865) (97,554) in H2 2020 compared to H2 2019 sq ft sq ft 112 39 deals deals

Source: Knight Frank Research

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Office Transactions

H2 2020 Transactions 2020 Transactions mn sq m (mn sq ft), YoY change mn sq m (mn sq ft), YoY change

SBD

0.3 (3.2) 0.4 (4.6)

-19% 2020 -19% Quthbullapur Quthbullapur Madinaguda H2 2020 Madinaguda Kukatpally Kukatpally

Serilingampally Serilingampally

Kondapur Kondapur

PBD East

Hitec City Hitec City Begumpet 0 (0) 0(0) Begumpet Madhapur Madhapur

Gachibowli - 2020 - Gachibowli H2 2020 PDB West Ameerpet Ameerpet 0.05 (0.6) 0.1 (1.2) Jubliee Hills Jubliee Hills

Nanakramguda -87% 2020 -81% Nanakramguda H2 2020

Banjara Banjara Manikonda Manikonda Hills CBD and Off-CBD Hills

0.004 (0.04) 0.004 (0.04) Uppal Kokapet Kokapet Uppal

-85% 2020 -89% H2 2020

L B Nagar L B Nagar

Rajendra Nagar Rajendra Nagar

Shamshabad Shamshabad

Source: Knight Frank Research All maps are for representational purpose not to scale

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Office Rental

Rental value range in H2 2020 in 12-month 6-month INR/sq m/month (INR/sq ft/month) change change

SBD

732-786 0% -1% (68-73) Quthbullapur Madinaguda Kukatpally

Serilingampally

Kondapur

PBD East

Hitec City Begumpet 323-377 0% 0% Madhapur (30-35) Gachibowli

PBD West Ameerpet 592-646 0% -1% Jubliee Hills (55-60) Nanakramguda

Banjara Manikonda Hills CBD and Off-CBD

Kokapet Uppal 592-646 0% 0% (55-60)

L B Nagar

Rajendra Nagar

Shamshabad

Source: Knight Frank Research All maps are for representational purpose not to scale

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Integrated Township Policy, Hyderabad’s experiment with urban planning

-PRADNYA NERKAR ASSOCIATE CONSULTANT - RESEARCH

yderabad has garnered significant business momentum the thriving Hyderabad Information Technology and Engineering and investor interest in the last five years. The city boasts Consultancy (HITEC) City. Consequently, West Hyderabad is more Hof global brand presence with the likes of Amazon, Google, developed and frequented than other parts of the city resulting in the Ikea, Facebook and Apple. It is therefore no surprise that the office pressure on infrastructure in this part of the city. The Telangana state space demand in Hyderabad has been booming. The city recorded an government, along with the local government agencies, has started all-time high of office space absorption of 1.2 mn sq m (12.8 mn sq ft) taking steps to nip this problem of stressed infrastructure in its bud. in 2019 which, owing to the ongoing COVID-19 pandemic, came down A slew of measures and initiatives focusing on balanced development to 0.6 mn sq m (6.0 mn sq ft) in 2020. As is the case with most metro and decongestion of the city have been announced, most of them in cities, increased commercial activity has distorted the development H2 2020. balance of Hyderabad and is resulting in increased pressure on the existing infrastructure. Hyderabad’s mainstay, the Information The government has taken a two-pronged approach - first is to Technology (IT) sector, is heavily concentrated in the western part improve public transport infrastructure within the city to ensure of the city i.e. in and around the Cyberabad district which includes smooth connectivity via different modes, and the second is to

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encourage development of self-contained, integrated townships in population of 1 mn each. 10% of the gross area has to be mandatory the suburbs to avoid unnecessary city travel. For the first part, the green cover. These townships will be spread out in all four directions government has undertaken measures such as the Strategic Road of the city, 5 km outside of the ORR. New townships can also be Development Plan (SRDP), the Metro Rail project and the Elevated developed in other municipal corporation areas like Warangal, Bus Corridor project. For the second part, the government has Karimnagar, Nizamabad and Ramagundam. The underlying announced the Integrated Township Policy (ITP) and the Growth in principles of these proposed townships are ‘Walk to Work’ and ‘Live, Dispersion (GRID) policy. Work, Learn and Play’ in the same township. These comprehensive, mixed development townships will help fuel real estate development, The ITP was approved and notified in November 2020. The policy improve people’s quality of living, reduce city travel as well as focuses on balanced and planned development for Hyderabad. To pollution levels, besides aid in planned and sustainable growth of decongest the core city growth, ITP incentivises realtors to set up new areas in and around Hyderabad. satellite townships, 5 km outside of the Outer Ring Road (ORR). These townships will be self-sufficient, large-scale real estate developments The ITP is essentially a government offering to real estate developers offering a mix of residential, office, retail, industrial, education (at focusing on large-scale real estate developments in different parts of least up to class 10), health and other such facilities. Their self- the city. Numerous benefits and incentives have been offered in ITP contained nature will discourage residents from unnecessarily to attract developers (see Table). Moreover, housing options in these traveling to the core city. townships are expected to be much more affordable than the core city residential projects as land rates in the suburbs would be cheaper. The proposed integrated townships have to be built over 100 acres Thus, the ITP makes a strong case for developer participation. (0.4 mn sq m / 4.3 mn sq ft) of land and are expected to cater to a

Incentives for development of integrated townships

Incentive Details

Exemption from development charges on land 90% 100% for EWS / LIG dwelling units Exemption from development charges on built-up area 75% for MIG units 50% for HIG units 100% on common facilities Property tax rebate 50% on all other properties Exemption from capitalization charges 100% Application clearance on priority basis Within 60 days from the date of application

Source: GO 189 – The Telangana Comprehensive Integrated Township Policy Rules, 2020. Note: The above list is indicative in nature; please refer to the source document for the complete list of incentives and their detailed provisions.

The ITP appears to be a promising solution to the city’s congestion township. If developers fail to acquire sufficient occupier interest, and infrastructure challenges, but it has its own limitations. For the resident base will be unsteady and the townships could end up starters, this is not the first time that Hyderabad has explored the as ghost towns. Thirdly, the ITP’s success is heavily dependent on township approach to urban planning. In 2013, the Hyderabad the effective implementation of the GRID policy. The GRID policy Metropolitan Development Authority (HMDA) had suggested focuses on attracting IT sector interest in eastern parts of Hyderabad, promoting satellite townships near the ORR in its master plan. specifically in Uppal and areas beyond, so as to decongest the dense The Tellapur Techno-city Project of 2007 accordingly suggested a IT hub in West Hyderabad. The IT sector is a primary driver of the township in 2014. 400 acres (1.6 mn sq m / 17.4 mn sq ft) of HMDA Hyderabad office market and majority of working professionals in the land was acquired for the same, however, only 100 acres (0.4 mn city work in this domain. Unless IT players find merit in moving away sq m / 4.3 mn sq ft) was permitted for development and later the from the western IT hub to these suburban townships, their employee project got stalled. Secondly, the ITP needs to facilitate anchors in base will continue to remain in the core city where the offices are. the form of industries or clusters that will help create a resident Thus, successful implementation of the GRID policy is key to the base for the township. The responsibility of finding such interested, success of the ITP. large scale, industries has been left to the developers of the

83 INDIAINDIA REAL REALESTATE ESTATE - KOLKATA INDIA REAL ESTATE

KOLKATA RESIDENTIAL AND OFFICE MARKET

84 INDIA REAL ESTATE - KOLKATA INDIA REAL ESTATE - KOLKATA

Swapan Dutta Branch Director - Kolkata

eal estate in Kolkata is still in a subdued state primarily In spite of the economic meltdown, investment in the real estate due to the situation ensuing post pandemic. However, as sector has always been regarded as profitable, yielding positive Rthe market slowly starts opening up, the latent or held results over time. Kolkata, one of the most populated metros of back demand could offer immense opportunities for the office India is not an exception to this trend. Home buyers in Kolkata leasing market. Movement in office spaces are true indicators of the have recently flocked to the Eastern Zone of Salt Lake and Rajarhat future of the local real estate scenario. It is always the absorption because of the immense benefits they offer in terms of luxury of office space that reflects the potential of economic activity and living, coupled with commuting facilities. New residential projects job catchment areas, leading to the demand of residential units. in Kolkata have been developed to satisfy the increasing demand That is precisely the reason why some of the traditional city centers for homes in this region. New Town also falls in this category with across Kolkata are losing out to the newly developed locations on the exceptional designs and large-scale amenities being provided at fairly outskirts. affordable rates to real estate investors looking forward to inhabit this region. Over the past few decades, Kolkata, the ‘City of Joy’, has witnessed significant infrastructure development and re-development. Now, with the real estate market in the main city reaching a saturation point, fresh development is taking place along the city’s boundary. Development of the metro and improvements in road connectivity, have given a fillip to these peripheral areas. Previously, the infrastructure of the city did not allow seamless transportation from the suburbs to the central business hub of Kolkata which was the reason behind home buyers consolidating in the central areas. However, things have changed for the better. Now, improved infrastructure and transport facilities, especially in areas around EM Bypass and BT Road have encouraged potential investors to invest in the real estate market of this region. After a wait of several years, the government has finally awarded infrastructure status to the largely-neglected sector of affordable housing, which is encouraging for developers. Infrastructure status will ensure easier access to institutional credit and help in reducing developers’ cost of borrowing for affordable projects.

85 INDIA REAL ESTATE - KOLKATA

Kolkata Residential Market

KOLKATA MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 CHANGE (YOY) H2 2020 Q4 2020 CHANGE (YOY) CHANGE (QOQ)

Launches 4,148 -27% 3,290 -35% 1,356 -30% (housing units)

Sales 8,912 -21% 5,975 -11% 2,054 -48% (housing units)

Price 34,585/ sq m -4% - - - - (wt avg)* (3,213/sq ft)

Unsold inventory 28,160 -14% - - - - (housing units)*

Quarters to sell* 11.2 - - - - -

Age of unsold inventory 15.2 - - - - - (in quarters)*

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Sales (housing units) 2,937 - 3,921 2,054

Sales as % of 2019 Quarterly average 104% - 139% 73%

Launches (housing units) 858 - 1,934 1,356

Launches as % of 2019 Quarterly average 61% - 137% 96%

Source: Knight Frank Research

Note: Q2 2020 market activity: COVID-19 disruptions in market activity led to a standstill in sales activity at residential project sites and registration offices during Q2 2020. In some cases, customers paid nominal amounts on application for housing units, which could be identified and allotted later. Such instances of transactions with limited details on booking have not been considered in the Q2 2020 numbers. With more details awaited on certainty of such transactions, the recording has been deferred and the same were captured during the subsequent reporting period.

• The resumption of economic activities with the phase wise 2020 period, as the sector slowly came back to normalcy with the unlocking in the July-December 2020 period has proved restart of construction activities and the festive period. beneficial for Kolkata’s real estate market. The residential market witnessed resurgence of positive consumer sentiment in the H2 • Since the Covid-19 outbreak, there has been a shift in the end-user

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preferences towards homebuying. As per our interactions with Madhyamgram and Jessore Road have a number of affordable developers, there are a lot of enquiries for affordable and mid- and mid-income segment projects launched by reputed segment ticket sized products. Enquiries in the luxury segment developers, accounting for 20% of the total residential units sold have also started resurfacing. The pent-up demand has translated in the city. into total sales of 5,975 residential units in the H2 2020 period. This represents an 11% Year-on-Year (YoY) decline over H2 2019. • Western Kolkata accounted for 12% of the city’s sales volume in H2 2020. The share of sales in this micro market has been steadily • However, in 2020, there has been a decline of 21% annually due to decreasing since H1 2019 due to lack of social infrastructure negligible sales volume recorded in Q2 2020. Had the pandemic in this belt. The eastern and central micro markets have not derailed the economic activities, Kolkata’s residential market marginal shares of units sold, to the tune of less than 5% and 1%, may have continued its upward sales growth trajectory. In Q1 respectively. 2020, the sector was at an inflection point with a 3% YoY increase driven largely by a good sales momentum for homes in the INR • Developers have been wary of launching new projects in Kolkata. 2.5–INR 5.0 mn bracket. With mounting unsold inventory pressures and demand being concentrated largely for the ready-to-move-in inventory, new • The homebuyers’ preference is largely skewed towards projects residential project development remained curbed to some extent that are within the price bracket of up to INR 5.0 mn and are in 2020. The number of new launches continued to be under either ready-to-move-in or nearing completion. As a result, ready- pressure in H2 2020 as well. New launches fell by 35% in H2 2020 to-move-in inventory is gaining more traction which also resulted compared to H2 2019. in heightened enquiries for products with ticket sizes up to INR 5.0 mn. • North Kolkata accounted for a 45% share of residential launches in H2 2020, owing to the new launches in locations such as • South Kolkata continued to account for the highest share of Dum Dum and Sodepur. The region has gained prominence in sales volume in both percentage change and number of units recent years, owing to the existing and upcoming phases of the sold in H2 2020. From a 35% share of total sales in H2 2019, the metro rail, impending infrastructure in and around VIP Road share of this micro market in Kolkata’s total sales has steadily and Jessore Road, and its proximity to Rajarhat, as well as the increased to 42% in H2 2020. South Kolkata has witnessed international airport. The majority of the new launches in this large-scale residential development in the past few years and micro market belong to the affordable housing sector. peripheral locations such as Joka, Narenderpur, Sonarpur Road and DH Road are preferred by potential buyers due to its good • Rajarhat noted 23% of the total residential launches in H2 2020 social infrastructure. Joka, in particular, remains a hotbed due to continued interest from the developer community. In for residential units’ absorption due to the upcoming Metro Rajarhat, new residential development is expected to continue connectivity. in the forthcoming years, considering the scale of office sector development and the infrastructure underway in the region. • South Kolkata is followed by Rajarhat, with a 21% share of the total residential units sold in H2 2020. This zone, comprising • South Kolkata has witnessed frenetic pace of new residential several Action Areas, has observed frenetic residential activity construction in the past few years. This micro market always in the last decade and with several projects nearing completion, accounted for atleast one-third share of new launches and has buyers’ appetite for residential units in this location has been a conventionally-preferred residential destination of the strengthened over a period of time. West Bengal Housing city. Due to launch of large-scale projects in locations such as Infrastructure Development Corporation (HIDCO), which plans Maheshtala, Joka and Diamond Harbour Road in the past, this and executes development projects in Rajarhat, has the entire micro market is now oversupplied with residential products. planning area divided into Action Area I, Action Area II and In H2 2020, new residential launches in this micro market Action Area III. accounted for only 7% of total launches.

• North Kolkata, recognised primarily as an industrial belt until • Of the total residential launches in H2 2020, products in the a few years ago, has emerged as a preferred residential location ticket size range of INR 2.5–INR 5 mn accounted for 62%. This since the Metro construction picked up pace on the Garia was followed by products up to INR 2.5 mn at 16%. Developers to Dum Dum Airport line. Areas such as Sodepur, BT Road, continue to foray in the affordable property segment in a

87 INDIA REAL ESTATE - KOLKATA

significant manner due to demand concentration in the • However, the age of inventory remained high at 15.2 quarters, as affordable and mid-segment bracket. Products with ticket sizes many projects have remained under construction for prolonged of more than INR 5.0 mn accounted for the remainder 22% of the periods, where buyer interest has waned in recent times. As total launches. developers are facing a liquidity crunch, this may derail the expected completion timelines of these projects making it • Because of lower supply compared to demand, Kolkata’s difficult to find buyers. unsold residential inventory continued to decline for the third consecutive year. In 2020, the unsold inventory declined by 14% • In H2 2020, the weighted average pricing of residential products YoY. in the city declined by 4% YoY and stood at INR 34,585/sq m (INR 3,213/sq ft). This is due to a slowdown in sales in the first • The quarters to sell (QTS) unsold inventory is the number of half of 2020, and momentary curtailment of demand during quarters required to sell the existing unsold inventory in the the lockdown. With the pent-up demand translating into new market. A lower QTS indicates a healthier market that is moving bookings for developers and sentiment improving towards towards recovery. Despite a reduction in the unsold inventory homebuying, residential prices could strengthen in 2021. size, the QTS inched up marginally from 11.0 in 2019 to 11.2 in 2020 due to low sales velocity in the H1 2020 period.

KOLKATA RESIDENTIAL MARKET

Launches Sales Wt avg price (INR/sq m)

8,000 39,000

7,000 38,000 The residential market

37,000 witnessed resurgence 6,000 of positive consumer 36,000 5,000

INR/sq m INR/sq sentiment in the H2 2020

No. of units No. 35,000 4,000 period, as the sector 34,000 slowly came back to 3,000 33,000 normalcy with the restart

2,000 32,000 of construction activities

1,000 31,000 and the festive period.

0 30,000 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

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KOLKATA AFFORDABLE MARKET ACTIVITY (UPTO INR 5 mn segment)

6,000

5,000

4,000

3,000

No. of units No. 2,000

1,000

0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

MICRO-MARKET CLASSIFICATION

Micro market Locations

Central Park Street, Rawdon Street, AJC Bose Road, Minto Park, Elgin Road

Kankurgachi, Beliaghata, Salt Lake, Narkeldanga, Keshtopur, EM Bypass East (eastern parts) Baguiati, Ultadanga, Jessore Road, Shyambazar, Lake Town, BT Road, North VIP Road

Rajarhat Rajarhat, New Town

Howrah, Rishra, Hooghly, Uttarpara, Chandan Nagar, Rajpur, Kona West Expressway Ballygunge, Alipore, Tollygunge, Narendrapur, Behala, Garia, Maheshta- South la, EM Bypass (southern parts)

Source: Knight Frank Research The homebuyers’ preference is largely skewed towards projects that are within the price

TICKET SIZE SPLIT OF SALES bracket of up to INR 5.0 mn and are either ready- < INR 5 mn > INR 5 mn to-move-in or nearing H2 2020 45% 55% completion.

H2 2019 33% 67%

Source: Knight Frank Research

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INDIA REAL ESTATE - KOLKATA

Baluhati North Residential Dumdum Launches and Sales

Launches Sales % Change (housing units) (housing units) (YOY) Subhas Nagar

Belur

North West 1,467 637% 1,548 366% Rajarhat 406 92% 544 38% Gopalpur 1,208 -20% 2020 1,965 -6% H2 2020

689 -27% 2020 1,129 -35% H2 2020

Naora

Shalimar Central Rajarhat 0 - 0 - 771 23 807 29%

45 -2% 2020 104 -6% H2 2020 1,256 -27% 2020 1,662 -35% H2 2020

East

425 378% 531 497%

275 -37% 2020 423 -50% H2 2020

Mukundapur

Baghajatin

Naktala

South

221 -94% 718 -83% Thakurpukur Garia

2,502 5% 2020 3,629 -8% H2 2020

Source: Knight Frank Research All maps are for representational purpose not to scale Note: “-” represents no change over the past period due to lack of activity. Rajpur Sonarpur

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Baluhati North Residential Dumdum Unsold Inventory

Unsold inventory QTS (in Age of inventory (housing units) YoY change quarters) (in quarters) Subhas Nagar

Belur

North West 6,580 13.0 Rajarhat 3,235 9.0 Gopalpur -9% 16.1 H2 2020 34% 10.3 H22020

Naora

Shalimar Central Rajarhat 263 9.8 7,479 14.2 128% 11.4 H2 2020 -23% 15.1 H2 2020

East

1,902 12.0

-28% 17.4 H2 2020

Mukundapur

Baghajatin

Naktala

South

8,701 9.2 Garia Thakurpukur -20% 15.9 H2 2020

Source: Knight Frank Research All maps are for representational purpose not to scale Note: “-” represents no change over the past period due to lack of activity. Rajpur Sonarpur

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Baluhati North Dumdum Residential Pricing

Price range in H2 2020 6 month Micro Market Location 12 month Change in INR/sq m (INR/sq ft) Change Subhas Nagar

Belur Park Street 129,167-215,278 (12,000-20,000) 0% 0% Central

Rajarhat Rawdon Street 107,639-209,896 (10,000-19,500) 0% 0% Gopalpur

Kankurgachi 55,972-91,493 (5,200-8,500) -1% 0% East Salt Lake 51,667-81,806 (4,800-7,600) -2% 0%

Madhyamgram 26,910-34,983 (2,500-3,250) 0% 0%

North BT Road 32,292-43,056 (3,000-4,000) -1% 0%

Jessore Road 37,674-57,049 (3,500-5,300) -2% 0% Naora

Rajarhat Rajarhat New Town 37,674-74,271 (3,500-6,900) -5% 0%

Shalimar

Ballygunge 86,111-204,514 (8,000-19,000) 0% 0%

Tollygunge 55,972-150,695 (5,200-14,000) 0% 0% South Behala 34,445-49,514 (3,200-4,600) 0% 0%

Narendrapur 27,448-48,438 (2,550-4,500) 0% 0%

Source: Knight Frank Research

Mukundapur

Baghajatin

Naktala

Thakurpukur Garia

Rajpur Sonarpur

92 INDIA REAL ESTATE - KOLKATA INDIA REAL ESTATE - KOLKATA

Kolkata Office Market

KOLKATA MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

New completions 0.01 (0.10) -98% - - - - mn sq m (mn sq ft)

Transactions 0.09 (0.92) -32% 0.04 (0.45) -38% 0.02 (0.23) 10% mn sq m (mn sq ft)

Weighted average transacted rental INR/sq 385 (35.8) -7% - - - 1% m/month (INR/sq ft/month)*

Stock mn sq m (mn sq ft)* 2.94 (31.6) 0% - - - -

Vacancy (%)* 41.7% - - - - -

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Transactions mn sq m (mn sq ft) 0.04 (0.47) - 0.02 (0.21) 0.02 (0.23)

Transactions as % of 2019 Quarterly average 138% - 62% 68%

New completions mn sq m (mn sq ft) 0.008 (0.09) - - -

New Completions as % of 2019 Quarterly 6% - - - average

Source: Knight Frank Research

• In 2020, Kolkata’s office market recorded transaction volume • In H2 2020, office leasing of 0.04 mn sq m (0.45 mn sq ft) took of 0.09 mn sq m (0.92 mn sq ft). Compared to 2019, this is a 32% place in Kolkata. This translates into a 38% Year-on-Year (YoY) decline, caused primarily due to minimal leasing activity in decline as occupier demand is yet to recover to the pre-covid Q2 2020, when the lockdown was imposed, and office leasing levels in comparison to 2019. Occupiers that had put decisions for decisions were put on the backburner by occupiers. As normalcy fresh take-up of office spaces on hold are yet to close deals and started returning with the unlocking, office leasing in Q3 2020 this may reflect in the leasing numbers of 2021. noted 62% of 2019’s quarterly average, further increasing up to 68% in Q4 2020. • In H2 2020, the Peripheral Business District-1 ([PBD-1] [Salt Lake City]) comprised a 48% share of the total gross leasing pie.

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Compared to H2 2019, Salt Lake City witnessed a 51% decline in H2 2020, while no deals were reported in the co-working sector the office space transacted. Salt Lake City continues to remain in this period. Due to high vacancy in Kolkata’s office market, the most popular business district amongst occupiers and the the co-working sector is yet to gain prominence as the concept of office spaces leased here largely determine the overall transaction shared workspaces is still very novel for this market. volumes of the city. • In 2020, new office supply largely remained absent, except for • The Peripheral Business District-2 ([PBD-2] [Rajarhat New Town]) 0.009 mn sq m (0.10 mn sq ft), which is a 98% decline over 2019. accounted for a 48% share in the city’s overall leasing volume in Due to a large office supply infusion of 0.56 mn sq m (6.0 mn sq ft) the second half of 2020. Unlike Salt Lake City, which witnessed in 2019, it was expected to remain low this year and the outbreak half of the transactions when compared to H2 2019, transaction of the pandemic led to a further deferment in construction volume in Rajarhat New Town declined by 12% YoY in H2 2020. activities. Like the major business districts across Kolkata and other parts of the country, this decrease is largely attributed to delay in decision • The absence of new office supply and limited office space leasing making by occupiers. With the economic environment moving led to a marginal decrease in office space vacancy in 2020. towards improvement and return to normalcy, Rajarhat New Kolkata’s office space vacancy continues to be the second highest Town will attract tenants for office space consumption in Kolkata. amongst the vacancies recorded in India’s top 8 markets.

• Despite the resumption in economic activities and occupiers • Weighted average rent in Kolkata declined by 7% YoY. This rental rethinking their strategies for office spaces, the number of deals decline is the result of the turmoil in the first half of the year, in H2 2020 largely remained at par with H2 2019. However, the which led tenants to relocate or resize office operations and average deal size shrunk by 36% YoY over H2 2019 to 1,338 sq led landlords to be flexible with leasing terms and concessions m (14,400 sq ft). This is largely due to 71% of the transactions allowed to retain clients. PBD-1 (Salt Lake City), noted an 8% YoY in this period being driven by smaller space office take-ups of decline in rents. up to 1,486 sq m (16,000 sq ft). Companies in pharma, advisory, telecommunications and media preferred smaller space -take-ups across micro markets, as they transition to working in the new normal.

• Kolkata attracted substantial occupier interest from companies in the Other Services sector in H2 2020. Advisory, telecommunications, media, pharma and consulting companies together accounted for 53% of the total transaction volume in this period. The share of Banking, Financial Services and • The Information Technology and Information Technology Insurance (BFSI) sector Enabled Services (IT/ITeS) sector accounted for 43% of the total in the total leasing has leasing in H2 2020. On a YoY basis, total office space consumed by the IT/ITeS sector decreased by 44% in terms of square footage reduced drastically in the leased, as occupiers remained cautious of expanding office past one year. Whilst BFSI spaces. accounted for 14% of total

• The share of Banking, Financial Services and Insurance (BFSI) office space leased in H2 sector in the total leasing has reduced drastically in the past one 2019, its share dropped to year. Whilst BFSI accounted for 14% of total office space leased in 1% of the total leasing in H2 2019, its share dropped to 1% of the total leasing in H2 2020. H2 2020. There is a 90% YoY decline in area leased due to the pandemic.

• The manufacturing sector accounted for 3% of office leasing in

94 INDIA REAL ESTATE - KOLKATA INDIA REAL ESTATE - KOLKATA

KOLKATA OFFICE MARKET

Completions Transactions

0.6

0.5

0.4

0.3 mn sq m 0.2

0.1

0.0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

KOLKATA OFFICE MARKET VACANCY

Vacancy Despite the resumption in economic activities 50% and occupiers rethinking

40% their strategies for office spaces, the number of 30% deals in H2 2020 largely

20% remained at par with H2 2019. However, the average 10% deal size shrunk by 36%

0% YoY over H2 2019 to 1,338 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 sq m (14,400 sq ft). Source: Knight Frank Research

95 INDIA REAL ESTATE - KOLKATA

BUSINESS DISTRICT CLASSIFICATION

Business district Micro markets

Park Street, Camac Street, Theatre Road, AJC Bose Road, Elgin, Rabindra Sadan, Esplanade, Lenin Sarani, S N Banerjee Road, Central Avenue, Dalhousie Square, Central Business District (CBD) and off CBD Mangoe Lane, Brabourne Road, Chandni Chowk, Rawdon Street, Loudon Street, Lee Road, Lord Sinha Road, Hastings, Hare Street, Kiran Shankar Ray Road, Upper Wood Street, Hungerford Street, Circus Avenue, Syed Amir Ali Avenue, Chowringhee Suburban Business District (SBD-1) Topsia, JBS Haldane Avenue, EM Bypass-Park Circus Connector Park Circus Connector EM Bypass-Rashbehari Connector, Anandapur Main Road, Rajdanga, South Suburban Business District (SBD-2) Ballygunge, Ashutosh Mukherjee Road, Gariahat, Hazra, Chetla, Jessore Road, Rashbehari Connector Nagerbazar Peripheral Business District (PBD-1) Salt Lake Sector V Salt Lake City Peripheral Business District (PBD-2) Rajarhat New Town, BT Road, Bantala Rajarhat New Town

Source: Knight Frank Research

SECTOR-WISE SPLIT OF TRANSACTIONS

H2 2019 H2 2020

14% BFSI 1%

47% Information Technology 43%

7% Manufacturing 3%

0% Co-working 0%

32% Other Services 53%

Note: BFSI includes BFSI support services Source: Knight Frank Research

AVERAGE DEAL SIZE AND NUMBER OF DEALS

H2 2019 H2 2020

Limited office space leasing coupled with 2,083sq m 1,338 sq m no new supply led to a (22,417) (14,400) sq ft sq ft marginal decrease in office 32 31 space vacancy in 2020. deals deals

Source: Knight Frank Research

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Baluhati North Baluhati North Office Transactions Dumdum Dumdum

H2 2020 Transactions 2020 Transactions mn sq m (mn sq ft) mn sq m (mn sq ft)

Subhas Nagar Subhas Nagar

Belur Belur

Rajarhat Rajarhat Gopalpur Gopalpur

PBD-2 (Rajarhat New Town)

0.02 (0.2) 0.02 (0.2)

-12% 2020 -53% H2 2020

PBD-1 (Salt Lake City)

0.02 (0.2) 0.06 (0.7)

-51% 2020 -61% H2 2020

Naora Naora

Shalimar Shalimar

SBD 2 (Rashbehari Connector)

CBD and off CBD 0.002 (0.02) 0.002 (0.02) 0.0005 - -7% 2020 -28%

(0.01) H2 2020

- 2020 -73% H2 2020

SBD 1 (Park Circus Connector)

- -

- 2020 - H2 2020 Mukundapur Mukundapur

Baghajatin Baghajatin

Naktala Naktala

Thakurpukur Garia Thakurpukur Garia

Source: Knight Frank Research All maps are for representational purpose not to scale Note: “-” represents no change over the past period due to lack of activity. Rajpur Rajpur Sonarpur Sonarpur

97 Dankuni Dankuni

Uttarpara Uttarpara

INDIA REAL ESTATE - KOLKATA

Baluhati North Baluhati North Dumdum Office Rental Dumdum

Rental value range in H2 2020 in 12-month 6-month INR/sq m/month (INR/sq ft/month) change change

Subhas Nagar Subhas Nagar

Belur Belur

Rajarhat Rajarhat Gopalpur Gopalpur

PBD-2 (Rajarhat New Town)

269-463 -3% -3% (25-43)

PBD-1 (Salt Lake City)

323-527 -8% -8% (30-49)

Naora Naora

Shalimar Shalimar

SBD-2 (Rashbehari Connector)

646-969 0% 0% (60-90)

CBD and off CBD

753-1,076 0% 0% (70-100)

SBD-1 (Park Circus Connector)

538-753 0% 0% (50-70)

Mukundapur Mukundapur

Baghajatin Baghajatin

Naktala Naktala

Thakurpukur Garia Thakurpukur Garia

Source: Knight Frank Research All maps are for representational purpose not to scale Rajpur Rajpur Sonarpur Sonarpur

98 INDIA REAL ESTATE - KOLKATA INDIA REAL ESTATE - KOLKATA

Affordable housing – the reason for joy in the City of Joy’s realty market

- DIVYA GROVER ASSISTANT VICE PRESIDENT – RESEARCH

ffordable housing has stood the test of time in Kolkata. The growth of weighted average home prices in Kolkata has only been 2% government’s efforts to place significant importance to the in the period 2010 to 2020, which makes it the second most affordable Apromotion of the affordable housing segment in the past market across the top eight cities. The continuous fall in Kolkata’s union budgets is bearing fruit now as homebuyers in Kolkata start weighted residential home prices from 2013 to 2018 has brought more house hunting again post the lockdown. The recent announcement, products in the category of up to INR 4.5 mn. This has been a blessing as part of COVID-19 stimulus measures, of extension of the Credit in disguise in the year 2020 and has catalyzed the sentiment towards Linked Subsidy Scheme (CLSS) upto 31st March 2021, has only been home purchases even in the new normal. the icing on the cake to channel pent-up demand in this property segment.

While affordable housing is a much sought-after asset class in other Indian cities too, Kolkata has an edge when it comes to the popularity of these products amongst homebuyers. The compounded annual

99 INDIA REAL ESTATE - KOLKATA

WEIGHTED AVERAGE RESIDENTIAL PRICES (INR PER SQ M)

45,000

40,000

35,000 39,009 37,674 37,200 37,200 35,835 37,286 37,717 35,446 34,014 30,000 32,077

25,000 29,192

20,000

15,000

10,000

5,000

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Knight Frank Research

In Kolkata, the end-user demand shift to the affordable property The upcoming metro project had already opened new micro-markets segment has been significant since 2017. Factors such as the along the Joka – Dalhousie and Garia-Airport routes. Lower land structural and regulatory shift in the real estate sector and growth of costs in the peripherals along the metro corridor had supported the northern and southern peripheral micro-markets due to construction entry of pedigreed developers in affordable construction already. of the upcoming metro led to a flurry of new launches for affordable The pandemic has been instrumental in altering consumer behavior projects. Aggressive marketing of these projects also catalyzed the making the conservative property buyers reassess their aspirations end-user demand for this segment at a time when homebuyers were in terms of savings and home buying. Affordable apartments from skeptical to invest in residential real estate as an asset class. credible developers with good ventilation, amenities and safety in townships or condominium projects have become very popular with Homebuyers not loosening their purse strings for products that the younger lot during the lockdown. In addition to North Kolkata, did not provide value for money made developers take note of the Joka, Narenderpur and Sonarpur in the southern belt have also seen a demand-supply mismatch as early as 2017. Leading developers’ entry skewed interest in affordable homes in 2020. into the affordable housing play in the past three years has led to an increase in the stockpile of affordable homes nearing completion or As the metro work nears completion, aspirational homebuyers are ready to move in. As per our interactions with real estate developers finding value in locking in good deals in affordable homes right now. in Kolkata, there has been a surge in enquiries and bookings in Flexi payment plans, lower home loan interest rates and volatility in products less than INR 4.0 mn in the past six months. In and around the stock market has made them relook at real estate. A few leading North Kolkata, locations such as Barasat, Madhyamgram, Dunlop developers are also getting ready to launch new residential products More, Sinthi More and Dum Dum have been garnering a lot of buyer to cater to the INR 3.0-4.0 mn bracket in early 2021 as they want to interest for these products as there has been an aspirational shift for capture a bigger market share by increasing their footprint for this these locations supported by local demand. Even interior pockets property segment. With job recovery underway and a latent demand of Rajarhat which were so far dominated by end-user demand for for affordable homes, they have realized that this property segment is mid-segment products has garnered good enquiries for such under- still the buyer’s favorite and is recovering much faster even amid the construction projects in the last three months. pandemic.

100 INDIAINDIA REAL REALESTATE ESTATE - MUMBAI INDIA REAL ESTATE

MUMBAI RESIDENTIAL AND OFFICE MARKET

101 INDIA REAL ESTATE - MUMBAI INDIA REAL ESTATE - MUMBAI

Rajani Sinha Chief Economist & National Director - Research

umbai metropolitan region (MMR) is one of the most In the midst of all this turbulence, the residential segment in MMR is vibrant cities of India and amongst the major drivers of basking in sunshine. The somber mood seen in residential segments Mthe Indian economy. It is the financial capital of India and in the last few years has turned exuberant in recent months. The boast headquarters of the biggest corporates. The vibrant nature and stamp duty cuts effective from September 2020 for a limited period the culture of the city also makes it the mainstay for the media and of 7 months has catalyzed the residential market, with sales jumping entertainment industry. up sharply. Credit for revival in the residential segment goes to the Maharashtra State Government, which timed the stamp duty cut MMR due to its high population density was one of the worst affected perfectly with the festive season and the lowest ever home loan rate cities by the COVID-19 pandemic. Consequently, the lockdown regime. In addition to the indirect discounts/price cuts they had imposed on March extended to over 9 months in the form of partial been offering earlier, most developers in MMR have offered to absorb lockdowns. Several parts of the city had to go into a second lockdown the remaining stamp duty incidence. Enticed by these offers, fence after partial reopening in the month of June. Due to the high sitters have also jumped onto the bandwagon and contributed to the COVID-19 case load, MMR has been the slowest amongst the top cities sharp demand upswing. With the economy recovering and buyers to lift restrictions under the phase wise unlock process. getting more confident of their future income streams, we expect the residential sales momentum to continue as more homebuyers will try The lifeline of MMR, the local trains, which carried over 7.5 to make most of the lower stamp duty regime. million residents of MMR every day is yet to open up for the entire population. There are also restrictions limiting the office occupancy at 30% when most other cities have done away with such restrictions on office usage. A large percentage of the workforce, as a result, is still on work-from-home mode which has adversely impacted the office demand in MMR. Given these restrictions, office occupiers in MMR have gone slow with their expansion plans and are currently negotiating with landlords to reduce the rentals. However, as the region moves towards normalcy, the local train services resume and permitted office occupancy moves to full capacity, we expect the office leasing to pick up.

The retail segment, battered the most by the pandemic, has slowly started to find its feet. Footfalls at malls and high streets are increasing gradually but are yet to reach pre-COVID levels.

102 INDIA REAL ESTATE - MUMBAI

MMR Residential Market

MMR MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

Launches 50,303 -37% 26,904 -25% 18,515 121% (housing units)

Sales 48,688 -20% 30,042 10% 22,407 193% (housing units)

Price 73,053 / sq m -3.2% - - - - (wt avg)* (6,787/sq ft)

Unsold inventory 146,916 1% - - - - (housing units)*

Quarters to sell* 10.7 - - - - -

Age of unsold inventory 14.6 - - - - - (in quarters)*

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Sales (housing units) 15,959 2,687 7,635 22,407

Sales as % of 2019 Quarterly average 105% 18% 50% 147%

Launches (housing units) 22,388 1,031 8,389 18,515

Launches as % of 2019 Quarterly average 112% 5% 42% 93%

Source: Knight Frank Research

• The Mumbai Metropolitan Region (MMR) was amongst the worst enforcement of a national lockdown. Sales came to a standstill affected cities in India by the COVID-19 pandemic. The resultant in the month of April and construction labourers migrated back lockdown was amongst the longest and most stringent compared to their hometowns bringing construction activity to a complete to other top cities. The nationwide lockdown imposed on March standstill as well. Thus, sales in Q2 2020 was 18% of the 2019 26, 2020 has been extended in MMR in the form of a partial quarterly average and launches dropped to 5% of 2019 quarterly lockdown until the end of 2020. average. Things started to improve gradually as the city was allowed to open up partially from June 8, 2020, and sales started • The real estate sector in this region was battered by the to pick up marginally from Q3 2020, though the overall activity

103 INDIA REAL ESTATE - MUMBAI INDIA REAL ESTATE - MUMBAI

was low in July-August. The sales pick up was hit as some parts of of price cuts. Stamp duty cuts helped change the sentiments of MMR had to go into a second lockdown in July after reopening in such fence sitters and lured them to the market. June, due to a spike in COVID-19 cases. • The pandemic had hampered site visits as homebuyers were • To help the sector survive this crisis, the State Government afraid to step outside their homes. To address this, many announced a reduction in stamp duty rates all over Maharashtra developers shifted to the digital medium for marketing their effective September 1, 2020 for a period of 7 months till March projects. This shift helped them close transactions faster after 31, 2021. The effective stamp duty rates were brought down by the stamp duty cut. In recent times, homebuyers have mostly 300 basis points from 5-7% to 2-4% across various regions in turned to do their project shortlisting online and only serious MMR from September till December 31, 2020 and brought down homebuyers are visiting project sites. This has helped developers by 200 bps from January 1, 2021 till March 31, 2021. Developer improve their conversion ratios and also bring down the sales associations complemented the announcement by subsuming turnaround time. the remaining part of the stamp duty. These developments invigorated the market, housing sales picked up from September • In absolute terms, the savings from stamp duty reduction was onwards and helped Q3 2020 sales reached 50% of the 2019 higher in the expensive markets of MMR. Further, the relatively quarterly average. The sales momentum grew stronger in Q4 higher income groups had not taken much of a hit on their 2020, which coincided with the festive period of Navaratri- income streams and also had a big cushion of savings. As a result, Dussehra-Diwali and surpassed that of pre-COVID levels, the expensive markets of MMR and luxury segments which were reaching 147% of the 2019 average. languishing for the past few years witnessed a jump in sales. The relatively more expensive markets of MMR such as South • The stamp duty cut gave a boost to homebuyer sentiments and Mumbai, Central Mumbai and Western Suburbs outperformed kindled the MMR real estate market. Sales in Q4 2020 jumped by other markets of MMR in Q4 2020 and in H2 2020. South Mumbai a whopping 80% Year-on-Year (YoY) and the strong performance witnessed the highest growth in sales of 112% during H2 2020, in Q4 helped the city clock 10% YoY sales growth in H2 2020. On followed by Central Mumbai at 106% and Western suburbs at 76% a Quarter-on-Quarter (QoQ) basis, sales jumped by 193% in Q4 during the same period. 57% of apartments sold in H2 2020 were 2020. A host of other factors that helped improve homebuyer priced above INR 5 million. sentiments and provided tailwinds to demand include reduction in home loan rates to historic lows, increase in household • Weighted average prices in MMR declined further by 3.2% YoY savings during lockdown, fresh demand for upgrade and indirect in H2 2020. While these are the reduction in quoted prices, the discounts/incentives offered by developers. actual discount offered during negotiations was higher.

• As per Maharashtra Government Department of Revenues • The acute labour shortage due to migration of construction and Stamp (IGR), monthly sales in Mumbai (Brihanmumbai labour to their hometowns had a bearing on residential launches Municipal Corporation) region grew by 39% YoY in September, and completion of projects. The launches were nearly a washout 36% YoY in October, 67% YoY in November and over 190% YoY in in Q2 2020 and recovered gradually in Q3 and Q4. The residential December. As per IGR, sales in each month before the stamp duty launches in Q4 2020 reached 93% of 2019 quarterly average but cut (i.e April-August) was down by more than 50% compared to were down 29% YoY in H2 2020. Acknowledging the severity of that recorded during the respective month last year. this problem, the regulator MahaRERA allowed an extension in completion date of projects by six months. • Due to high real estate prices, MMR had always been notorious for its matchbox sized compact and congested homes. During • If we compare numbers for launches and sales for the full year, lockdown, families realised the need for having additional rooms it may not be an apt comparison as 2020 has been an aberration. in their homes as it was difficult to carry out school, college, office Almost 1-2 quarters of real estate activity in 2020 was lost due and regular household activities within the boundaries of the to lockdown related issues. Despite the massive recovery in Q4 compact home. Thus, the lockdown created a fresh demand for 2020, the full year numbers for 2020 would therefore be lower upgrade which may not have been a necessity earlier. compared to 2019. Annual launches were down 37% YoY and sales were down 20% YoY in 2020. As annual launches were • Over the past few years, a segment of serious homebuyers had still greater than sales, unsold inventory increased by 1% YoY. deferred their decision to make a home purchase in anticipation Quarters-to-Sell (QTS) increased marginally from 9.3 in 2019 to

104 INDIA REAL ESTATE - MUMBAI

10.7 at the end of 2020 as annual launches

MMR RESIDENTIAL MARKET were marginally greater than sales in 2020 and almost 1-2 quarter of sales were a near Launches Sales Wt avg price (INR/sq m) washout.

50000 80000 • Another interesting change in homebuyer 45000 79000 behaviour was the willingness to explore 40000 78000 under-construction property options.

35000 77000 Over the past few years, most homebuyers were keen to buy only ready to move in

30000 76000 m INR/sq

No. of units No. apartments, however, in the latest period, 25000 75000 homebuyers have started purchasing under-construction apartments as well, 20000 74000 particularly in projects which are 12-18 15000 73000 months away from completion. Lower

10000 72000 prices of under-construction apartments compared to ready to move apartments, 5000 71000 flexible payment options and greater 0 70000 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 choice of apartments were the major factors for this shift in homebuyer Source: Knight Frank Research behaviour.

MMR AFFORDABLE MARKET ACTIVITY (UPTO INR 5 million segment)

18,000

16,000

14,000

12,000

No. of units No. 10,000

8,000

6,000

4,000 Homebuyers in the mid 2,000 and high income segments 0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 have made most of the stamp duty cut. As a result,

TICKET SIZE SPLIT OF SALES the expensive markets of MMR and luxury segments < INR 5 mn > INR 5 mn which were languishing H2 2020 57% 43% for the past few years have

H2 2019 52% 48% witnessed a jump in sales in the latest period.

Source: Knight Frank Research

105 INDIA REAL ESTATE - MUMBAI INDIA REAL ESTATE - MUMBAI KAMAN ROAD KAMAN ROAD

BHAYANDAR BHAYANDAR

Residential KHARBAO KHARBAO Launches and Sales MIRA ROAD MIRA ROAD

Launches Sales % Change BHIWANDI AMBIVALI BHIWANDI AMBIVALI (housing units) (housing units) (YOY) ROAD ROAD

DAHISAR DAHISAR RAILWAY RAILWAY Peripheral Western Suburbs SHAHAD SHAHAD

4,467 -45% 9,256 -42% KALYAN JN KALYAN JN

BORIVALI BORIVALI RAILWAY 2020 THAKURLI R S RAILWAY THAKURLI R S 6,882 2% 10,702 -22% H2 2020 PUNE LIN K PUNE LIN K DOMBIVLIPeripheral Central Suburbs DOMBIVLI ULHASNAGAR ULHASNAGAR KOPAR KOPAR KOPAR KOPAR ROAD R S 7,195 6% 11,920 -19% ROAD R S

KANDIVALI Thane KANDIVALI

8,582 -8% 2020 14,225 -26% 4,697 -19% KALWA8,971 R S -36% H2 2020 KALWA R S

MUMBRA DATIWLI R S MUMBRA DATIWLI R S MALAD R S THANE MALAD R S THANE 3,865 25% 2020 5,915 -9% DIVA DIVA H2 2020

MULUND R S MULUND R S

GOREGAON GOREGAON

AIROLI R S AIROLI R S NAHUR NAHUR

BHANDUP R S BHANDUP R S

RABALE RABALE JOGESHWARI R S JOGESHWARI R S

Western Suburbs KANJURMARG R S KANJURMARG R S

3,060 -24% 6,337 -42% ANDHERI ANDHERI GHANSOLI R S GHANSOLI R S VIKROLI R S VIKROLI R S 4,474 76% 2020 6,936 -6% H2 2020

VILE VILE PARLE R S PARLE R S I I R R T T CentralS Suburbs S A A H H S S R R U U BAHAD BAHAD 3,894LAL -25% 6,712 -37% LAL SANTA CRUZ SANTA CRUZ VIDYAVIHAR TALOJE VIDYAVIHAR TALOJE PANCHNAND R S PANCHNAND R S MUMBAI 3,004 12% 2020 4,503 -16% TURBHE R S MUMBAI TURBHE R S H2 2020 LOKMANYA LOKMANYA KHAR TILAK SANPADA KHAR TILAK SANPADA ROAD R S KURLA R S ROAD R S KURLA R S JUNCTION JUNCTION BANDRA TILAK NAGAR CHEMBUR BANDRA TILAK NAGAR CHEMBUR TERMINUS VASHI TERMINUS VASHI RAILWAY RAILWAY GOVANDI GOVANDI BANDRA JUINAGAR R S BANDRA JUINAGAR R S CHUNNABHATTI NAVADE ROAD R S CHUNNABHATTI NAVADE ROAD R S

MANKHURD MANKHURD SION R S SION R S MAHIM MAHIM JUNCTION NAVI MUMBAI JUNCTION NAVI MUMBAI

GURU TEGH KALAMBOLI R S GURU TEGH KALAMBOLI R S BAHADUR NAGAR R S NERUL R S BAHADUR NAGAR R S NERUL R S MATUNGA MATUNGA ROAD R S ROAD R S MATUNGA R S MATUNGA R S Navi MumbaiSEAWOODS SEAWOODS Central Mumbai - DARAVE KHARGHAR R S - DARAVE KHARGHAR R S DADAR DADAR DADAR 2,860 -40% 5,579 -47%BELAPUR CBD DADAR BELAPUR CBD 581 -40% 791 -58% MANSAROVAR MANSAROVAR PAREL PAREL 2020 ELPHINSTONE 2,384 -4% 5,193 -30% KHANDESHWAR ELPHINSTONE KHANDESHWAR

ROAD R S2020 ROAD R S 506 106% 768 -6% H2 2020 H2 2020 MUMBAI MUMBAI LOWER PAREL R S REAY ROAD LOWER PAREL R S REAY ROAD CURREY CURREY ROAD R S ROAD R S PANVEL PANVEL

CHINCHPOKLI R S CHINCHPOKLI R S MUMBAI MUMBAI MAHALAKSHMI MAHALAKSHMI MUMBAI MUMBAI REAY ROAD REAY ROAD MUMBAIBYCULLA MUMBAIBYCULLA CENTRAL LOCAL MICRO-MARKET CLASSIFICATION CHIKHALE R S CENTRAL LOCAL CHIKHALE R S DOCKYARD DOCKYARD ROAD ROAD GRANT ROAD GRANT ROAD BY SANDHURST BY SANDHURST ROAD Micro market Locations ROAD

MASJID MASJID CHARNI BUNDER R S SOMATANE CHARNI BUNDER R S SOMATANE ROAD ROAD M M A Central Mumbai Dadar, Lower Parel, Mahalaxmi, Worli, Prabhadevi A H South Mumbai H A CHHATRAPATI A CHHATRAPATI R SHIVAJI TERMINUS R SHIVAJI TERMINUS S S

H H

I I

150 -51% 737 -26% CHURCHGATE Central Suburbs Sion, Chembur, Wadala, Kurla, Ghatkopar, Vikhroli, Bhandup, Mulund CHURCHGATE JASAI R S JASAI R S

346 112% 2020 447 30% H2 2020 Navi Mumbai Vashi, Nerul, Belapur, Kharghar, Airoli, Panvel, Ulwe, Sanpada

Peripheral Central Kalyan, Kalwa, Dombivli, Ambernath, Bhiwandi, Mumbra, Karjat Suburbs Peripheral Western RASAYANI RASAYANI Vasai, Virar, Boisar, Palghar, Bhayandar, Nalasopara Suburbs

URAN R S URAN R S South Mumbai Malabar Hill, Napean Sea Road, Walkeshwar, Altamount Road, Colaba

APTA R S APTA R S Naupada, Ghodbunder Road, Pokhran Road, Majiwada, Thane Khopat, Panchpakhadi

Western Suburbs Bandra, Andheri, Goregaon, Kandivali, Borivali, Santacruz, Vile Parle Source: Knight Frank Research All maps are for representational purpose not to scale

106 INDIA REAL ESTATE - MUMBAI KAMAN ROAD KAMAN ROAD

BHAYANDAR BHAYANDAR

KHARBAO Residential KHARBAO Unsold Inventory MIRA ROAD MIRA ROAD

Unsold inventory QTS (in Age of inventory

BHIWANDI AMBIVALI (housing units) YoY change quarters) (in quarters) BHIWANDI AMBIVALI ROAD ROAD

Peripheral Western Suburbs DAHISAR DAHISAR RAILWAY RAILWAY SHAHAD 17,514 5.7 SHAHAD

KALYAN JN -8% 14.9 KALYAN JN H2 2020 BORIVALI BORIVALI RAILWAY THAKURLI R S RAILWAY THAKURLI R S

PUNE LIN K PUNE LIN K DOMBIVLI DOMBIVLI Peripheral Central Suburbs ULHASNAGAR ULHASNAGAR KOPAR KOPAR KOPAR KOPAR ROAD R S ROAD R S 13,265 3.2 KANDIVALI KANDIVALI Thane -15% 12.5 KALWA R S KALWA R S 25,504 16.5 H2 2020 MUMBRA DATIWLI R S MUMBRA DATIWLI R S MALAD R S THANE MALAD R S THANE DIVA 14% 9.1 DIVA H2 2020

MULUND R S MULUND R S

GOREGAON GOREGAON

AIROLI R S AIROLI R S NAHUR NAHUR

BHANDUP R S BHANDUP R S

RABALE RABALE JOGESHWARI R S JOGESHWARI R S Western Suburbs KANJURMARG R S KANJURMARG R S

ANDHERI ANDHERI 24,831 13.9 GHANSOLI R S GHANSOLI R S VIKROLI R S VIKROLI R S -2% 12.0 H2 2020

VILE VILE PARLE R S PARLE R S I I R R T T S CentralS Suburbs A A H H S S R R U U BAHAD BAHAD LAL LAL 24.5 SANTA CRUZ SANTA CRUZ 30,246 VIDYAVIHAR TALOJE VIDYAVIHAR TALOJE PANCHNAND R S PANCHNAND R S MUMBAI TURBHE R S MUMBAI 8% 14.9 TURBHE R S H2 2020 LOKMANYA LOKMANYA KHAR TILAK SANPADA KHAR TILAK SANPADA ROAD R S KURLA R S ROAD R S KURLA R S JUNCTION JUNCTION BANDRA TILAK NAGAR CHEMBUR BANDRA TILAK NAGAR CHEMBUR TERMINUS VASHI TERMINUS VASHI RAILWAY RAILWAY GOVANDI GOVANDI BANDRA JUINAGAR R S BANDRA JUINAGAR R S CHUNNABHATTI NAVADE ROAD R S CHUNNABHATTI NAVADE ROAD R S

MANKHURD MANKHURD SION R S SION R S MAHIM MAHIM JUNCTION NAVI MUMBAI JUNCTION NAVI MUMBAI

GURU TEGH KALAMBOLI R S GURU TEGH KALAMBOLI R S BAHADUR NAGAR R S NERUL R S BAHADUR NAGAR R S NERUL R S MATUNGA MATUNGA ROAD R S ROAD R S MATUNGA R S MATUNGA R S SEAWOODS NaviSEAWOODS Mumbai - DARAVE KHARGHAR R S Central Mumbai - DARAVE KHARGHAR R S DADAR DADAR DADAR BELAPUR CBD DADAR BELAPUR CBD MANSAROVAR 26,938 17.1 MANSAROVAR 6,493 32.8 PAREL PAREL ELPHINSTONE ELPHINSTONE ROAD R S KHANDESHWAR ROAD R S 1% 16.0 KHANDESHWAR 0% 20.1 H2 2020

MUMBAI H2 2020 MUMBAI LOWER PAREL R S REAY ROAD LOWER PAREL R S REAY ROAD CURREY CURREY ROAD R S ROAD R S PANVEL PANVEL

CHINCHPOKLI R S CHINCHPOKLI R S MUMBAI MUMBAI MAHALAKSHMI MAHALAKSHMI MUMBAI MUMBAI REAY ROAD REAY ROAD MUMBAIBYCULLA MUMBAIBYCULLA CENTRAL LOCAL CHIKHALE R S CENTRAL LOCAL CHIKHALE R S DOCKYARD DOCKYARD ROAD ROAD GRANT ROAD GRANT ROAD BY SANDHURST BY SANDHURST ROAD ROAD

MASJID MASJID CHARNI BUNDER R S SOMATANE CHARNI BUNDER R S SOMATANE ROAD ROAD M M A A H H South Mumbai A CHHATRAPATI A CHHATRAPATI R SHIVAJI TERMINUS R SHIVAJI TERMINUS S S

H H

I I

CHURCHGATE CHURCHGATE 2,125 21.5 JASAI R S JASAI R S 16% 16.9 H2 2020

RASAYANI RASAYANI

URAN R S URAN R S

APTA R S APTA R S

Source: Knight Frank Research All maps are for representational purpose not to scale

107 INDIA REAL ESTATE - MUMBAI INDIA REAL ESTATE - MUMBAI

Residential Pricing

Price range in H2 2020 6 month Micro Market Location 12 month Change in INR/sq m (INR/sq ft) Change

Lower Parel 269,100–387,504 (25,000–36,000) -4% -2% Central Mumbai Worli 333,684–592,020 (31,000–55,000) -3% -1%

Ghatkopar 129,168–236,808 (12,000–22,000) 0% 0%

Central Suburbs Mulund 115,174–150,696 (10,700–14,000) -6% -5%

Powai 156,078–215,280 (14,500–20,000) -2% -1%

South Mumbai Tardeo 430,560–645,840 (40,000–60,000) -4% -3%

Badlapur 29,063–37,674 (2,700–3,500) -4% -2% Peripheral Central Suburbs Dombivli 48,438–64,584 (4,500–6,000) -2% -1%

Panvel 40,903–69,966 (3,800–6,500) -4% -3%

Navi Mumbai Kharghar 72,119–96,876 (6,700–9,000) -4% -3%

Vashi 107,640–161,460 (10,000–15,000) -2% -1%

Mira Road 59,202–78,577 (5,500–7,300) -3% -2% Peripheral Western Suburbs Virar 47,362–59,202 (4,400–5,500) -4% -2%

Ghodbunder Road 64,584–107,640 (6,000–10,000) -5% -3% Thane Naupada 150,696–193,752(14,000–18,000) -6% -5%

Andheri 161,460–236,808 (15,000–22,000) -3% -1%

Bandra (West) 430,560–645,840 (40,000–60,000) -3% -1%

Western Suburbs Borivali 118,404–161,460 (11,000–15,000) -4% -3%

Dahisar 96,876–118,404 (9,000–11,000) -3% -2%

Goregaon 139,932–161,460 (13,000–15,000) -5% -5%

108 INDIA REAL ESTATE - MUMBAI

MMR Office Market

MMR MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

Completions 0.49 (5.3) -2% 0.15 (1.7) -52% 0.13 (1.4) 353% mn sq m(mn sq ft)

Transactions 0.56 (6) -38.3% 0.2 (2.1) -58% 0.1 (1.1) 8% mn sq m (mn sq ft)

Weighted average transacted rental INR/sq 1,246 (116) -5.6% - - - -1% m/month (INR/sq ft/month)*

Stock mn sq m (mn sq ft)* 14.05 (151.3) 4% - - - -

Vacancy (%)* 19.8% - - - - -

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Transactions mn sq m (mn sq ft) 0.23 (2.5) 0.12 (1.3) 0.95 (1.0) 0.10 (1.1)

Transactions as % of 2019 Quarterly average 104% 55% 42% 46%

New completions mn sq m (mn sq ft) 0.23 (2.5) 0.10 (1.1) 0.03 (0.3) 0.13 (1.4)

New Completions as % of 2019 Quarterly 104% 46% 12% 56% average

Source: Knight Frank Research

• The Mumbai Metropolitan Region (MMR) office market has hence a drop was expected in 2020 as large pre-commitment witnessed a tepid year in 2020. The transaction activity dropped deals in MMR office market are rare, unlike those witnessed in 58% YoY during H2 2020 and 38% YoY during full year 2020. It low vacancy markets like Hyderabad, Pune or Bengaluru. How- is important to note that this drop was against a high base of H2 ever, in 2020, office leasing was majorly impacted on account of 2019 and the whole of 2019, which had witnessed 2 large pre-com- restrictions on permitted office space utilization and access to mitment deals totalling ~0.2 mn sq m (2 mn sq ft). local trains in the wake of COVID-19 activity curbs placed by the Maharashtra government. MMR was badly affected by the pan- • 2019 had been a historic year for MMR office market with trans- demic and the nationwide lockdown enforced on March 26, 2020 actions touching a record high of 0.9 mn sq m (9.7 mn sq ft), and was extended in the form of partial lockdown to over 9 months.

109 INDIA REAL ESTATE - MUMBAI INDIA REAL ESTATE - MUMBAI

• As a result, employees have had to de-

pend on the road network to reach their MMR MARKET SNAPSHOT workplace. Further, offices in MMR have been permitted to operate at a maximum New Completion Transactions

workforce capacity of 30%. On account of 0.5 these two major hindrances, companies have been forced to keep a majority of their workforce on work-from-home (WFH) 0.4 mode. Occupiers are looking to postpone new space take up as they will not be able 0.3 to utilise it until the lockdown related restrictions remain, and this has curtailed demand. Having said that, occupiers with 0.2

a long term view and better business pros- mn sq m pects have taken up space for expansion, as they are finding good deals in the market. 0.1

• We believe that once restrictions on access

to local trains and office space utilisation 0.0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 are removed, office demand will start to re-

cover. Until then, occupiers are likely to re- Source: Knight Frank Research new leases which are on the verge of expiry or relocate to cheaper markets. On account of the business impact, some companies have relocated to less expensive business MMR OFFICE MARKET VACANCY districts or less expensive buildings within Vacancy the same business districts which has created downward pressure on rents during 25% H2 2020.

20% • The weighted average rents at city level were down 5.6% YoY during 2020 and have 15% corrected in varied proportions across

business districts. While in tight vacancy 10% markets like BKC & off-BKC, the rent cor-

rection was lower at around 4% YoY, PBD 5% which had the highest vacancy level within

the city witnessed rent correction to the 0% tune of 11% YoY. Several occupiers have H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 sought lower rents citing loss of business Source: Knight Frank Research and restriction on office space utilisation.

• In terms of occupier profile, manufacturing share in overall transactions has more than doubled from 7% during H2 2019 to 18% sector garnered the highest share of trans- during H2 2020. The number of deals declined from 138 during H2 2019 to 85 during H2 actions during H2 2020 at 25%, followed 2020 and the average size of deal decreased from 3,404 sq m (36,639 sq ft) to 2,331 sq m by BFSI at 23%. Co-working operators (25,094 sq ft). continue to actively take up space and their

110 INDIA REAL ESTATE - MUMBAI

BUSINESS DISTRICT CLASSIFICATION

Business district Micro markets

CBD & Off CBD Nariman Point, Cuffe Parade, Ballard Estate, Fort, Mahalaxmi

Bandra Kurla Complex & Off-Bandra Kurla Complex BKC, Bandra (E), Kalina and Kalanagar (BKC & Off-BKC)

Central Mumbai Parel, Lower Parel, Dadar, Prabhadevi, Worli

SBD West Andheri, Jogeshwari, Goregoan, Malad

SBD Central Kurla, Ghatkopar, Vikhroli, Kanjurmarg, Powai, Bhandup, Chembur

PBD Thane, Airoli, Vashi, Ghansoli, Rabale, Belapur

SECTOR-WISE SPLIT OF TRANSACTIONS

H2 2019 H2 2020

64% BFSI 23%

3% Information Technology 13%

3% Manufacturing 25%

7% Co-working 18%

23% Other Services 21%

Note: BFSI includes BFSI support services Source: Knight Frank Research

AVERAGE DEAL SIZE AND NUMBER OF DEALS

H2 2019 H2 2020 % 3,404sq m 2,331 YoY38 drop in leasing activity in 2020 sq m (36,639) (25,094) against a high base of 2019 sq ft sq ft 138 85 deals deals

Source: Knight Frank Research

111 INDIA REAL ESTATE - MUMBAI INDIA REAL ESTATE - MUMBAI KAMAN ROAD KAMAN ROAD

BHAYANDAR BHAYANDAR

Office Transactions KHARBAO KHARBAO

H2 2020 Transactions 2020 Transactions mn sq m (mn sq ft) MIRA ROAD mn sq m (mn sq ft) MIRA ROAD

BHIWANDI AMBIVALI BHIWANDI AMBIVALI ROAD ROAD

DAHISAR DAHISAR RAILWAY RAILWAY

SHAHAD SHAHAD

KALYAN JN KALYAN JN

BORIVALI BORIVALI RAILWAY THAKURLI R S RAILWAY THAKURLI R S

PUNE LIN K PUNE LIN K DOMBIVLI DOMBIVLI ULHASNAGAR ULHASNAGAR KOPAR KOPAR KOPAR KOPAR ROAD R S ROAD R S

KANDIVALI KANDIVALI

KALWA R S KALWA R S

MUMBRA DATIWLI R S MUMBRA DATIWLI R S MALAD R S THANE MALAD R S THANE SBD WEST DIVA DIVA

0.09 (0.9) 0.13 (1.5)

MULUND R S MULUND R S -71% 2020 -65%

H2 2020 GOREGAON GOREGAON

AIROLI R S AIROLI R S NAHUR NAHUR

BHANDUPSBD R SCentral BHANDUP R S

RABALE RABALE JOGESHWARI R S 0.04 (0.5) 0.09 (1.0) JOGESHWARI R S

KANJURMARG R S KANJURMARG R S

-32% 2020 -50% H2 2020

ANDHERI ANDHERI GHANSOLI R S GHANSOLI R S VIKROLI R S VIKROLI R S

VILE VILE PARLE R S PARLE R S I I R R T T S S A A H H S PBD S R R U U BAHAD BAHAD LAL LAL SANTA CRUZ 0.02 (0.3) 0.17 (1.8) SANTA CRUZ VIDYAVIHAR TALOJE VIDYAVIHAR TALOJE PANCHNAND R S PANCHNAND R S BKC and off BKCMUMBAI TURBHE R S MUMBAI TURBHE R S -55% 2020 -9%

LOKMANYA H2 2020 LOKMANYA KHAR TILAK SANPADA KHAR TILAK SANPADA ROAD R S KURLA R S ROAD R S KURLA R S 0.03 (0.3) JUNCTION0.07 (0.8) JUNCTION BANDRA TILAK NAGAR CHEMBUR BANDRA TILAK NAGAR CHEMBUR TERMINUS VASHI TERMINUS VASHI RAILWAY RAILWAY 2020 32% -14% GOVANDI GOVANDI

BANDRAH2 2020 JUINAGAR R S BANDRA JUINAGAR R S CHUNNABHATTI NAVADE ROAD R S CHUNNABHATTI NAVADE ROAD R S

MANKHURD MANKHURD SION R S SION R S MAHIM MAHIM JUNCTION NAVI MUMBAI JUNCTION NAVI MUMBAI

GURU TEGH KALAMBOLI R S GURU TEGH KALAMBOLI R S BAHADUR NAGAR R S NERUL R S BAHADUR NAGAR R S NERUL R S MATUNGA MATUNGA ROAD R S ROAD R S MATUNGA R S MATUNGA R S SEAWOODS SEAWOODS - DARAVE KHARGHAR R S - DARAVE KHARGHAR R S DADAR DADAR DADAR BELAPUR CBD DADAR BELAPUR CBD MANSAROVAR MANSAROVAR

PAREL PAREL ELPHINSTONE KHANDESHWAR ELPHINSTONE KHANDESHWAR Central MumbaiROAD R S ROAD R S MUMBAI MUMBAI LOWER PAREL R S REAY ROAD LOWER PAREL R S REAY ROAD CURREY CURREY 0.008 (0.09) ROAD0.07 R S (0.8) ROAD R S PANVEL PANVEL

CHINCHPOKLI2020 R S CHINCHPOKLI R S MUMBAI24% 243% MUMBAI

H2 2020 MAHALAKSHMI MAHALAKSHMI MUMBAI MUMBAI REAY ROAD REAY ROAD MUMBAIBYCULLA MUMBAIBYCULLA CENTRAL LOCAL CHIKHALE R S CENTRAL LOCAL CHIKHALE R S DOCKYARD DOCKYARD ROAD ROAD GRANT ROAD GRANT ROAD BY SANDHURST BY SANDHURST ROAD ROAD

MASJID MASJID CHARNI BUNDER R S SOMATANE CHARNI BUNDER R S SOMATANE ROAD ROAD M M A A H H A CHHATRAPATI A CHHATRAPATI R SHIVAJI TERMINUS R SHIVAJI TERMINUS S S

H H

I I

CBD and off CBD CHURCHGATE CHURCHGATE 0.004 (0.04) 0.013 (0.1) JASAI R S JASAI R S

-84% 2020 -60% H2 2020

RASAYANI RASAYANI

URAN R S URAN R S

APTA R S APTA R S

Source: Knight Frank Research All maps are for representational purpose not to scale

112 INDIA REAL ESTATE - MUMBAI KAMAN ROAD KAMAN ROAD

BHAYANDAR BHAYANDAR

KHARBAO Office Rental KHARBAO

Rental value range in H2 2020 in 12-month 6-month MIRA ROAD INR/sqMIRA m/month ROAD (INR/sq ft/month) change change

BHIWANDI AMBIVALI BHIWANDI AMBIVALI ROAD ROAD

DAHISAR DAHISAR RAILWAY RAILWAY

SHAHAD SHAHAD

KALYAN JN KALYAN JN

BORIVALI BORIVALI RAILWAY THAKURLI R S RAILWAY THAKURLI R S

PUNE LIN K PUNE LIN K DOMBIVLI DOMBIVLI ULHASNAGAR ULHASNAGAR KOPAR KOPAR KOPAR KOPAR ROAD R S ROAD R S

KANDIVALI KANDIVALI

KALWA R S KALWA R S

MUMBRA DATIWLI R S MUMBRA DATIWLI R S MALAD R S THANE MALAD R S THANE DIVA DIVA SBD WEST

MULUND R S 861–1,507 MULUND R S -6% -8% GOREGAON GOREGAON(80–140)

AIROLI R S AIROLI R S NAHUR NAHUR

BHANDUP R S BHANDUP R S SBD Central RABALE RABALE JOGESHWARI R S JOGESHWARI R S 861–1,615 KANJURMARG R S KANJURMARG R S -7% -8% (80–150)

ANDHERI ANDHERI GHANSOLI R S GHANSOLI R S VIKROLI R S VIKROLI R S

VILE VILE PARLE R S PARLE R S I I R R T T S S A A H H S S R R U U BAHAD BAHAD LAL LAL SANTA CRUZ SANTA CRUZ VIDYAVIHAR TALOJE VIDYAVIHAR TALOJE PANCHNAND R S PBD PANCHNAND R S MUMBAI TURBHE R S BKC andMUMBAI off BKC TURBHE R S

LOKMANYA LOKMANYA KHAR TILAK SANPADA KHAR TILAK SANPADA ROAD R S KURLA R S ROAD R S KURLA R S 538–969 JUNCTION 2,368–3,552JUNCTION -11% -10% BANDRA TILAK NAGAR CHEMBUR BANDRA TILAK-4% NAGAR-5% CHEMBUR (50–90) TERMINUS VASHI TERMINUS (220–350) VASHI RAILWAY RAILWAY GOVANDI GOVANDI BANDRA JUINAGAR R S BANDRA JUINAGAR R S CHUNNABHATTI NAVADE ROAD R S CHUNNABHATTI NAVADE ROAD R S

MANKHURD MANKHURD SION R S SION R S MAHIM MAHIM JUNCTION NAVI MUMBAI JUNCTION NAVI MUMBAI

PAREL PAREL ELPHINSTONE ELPHINSTONE ROAD R S KHANDESHWAR ROAD R S KHANDESHWAR

MUMBAI MUMBAI LOWER PAREL R S REAY ROAD LOWER PAREL R S REAY ROAD CURREY CentralCURREY Mumbai ROAD R S ROAD R S PANVEL PANVEL

CHINCHPOKLI R S CHINCHPOKLI R S MUMBAI MUMBAI 1,830–2,153 MAHALAKSHMI MAHALAKSHMI -6% -8% (170–210) MUMBAI MUMBAI REAY ROAD REAY ROAD MUMBAIBYCULLA MUMBAIBYCULLA CENTRAL LOCAL CHIKHALE R S CENTRAL LOCAL CHIKHALE R S DOCKYARD DOCKYARD ROAD ROAD GRANT ROAD GRANT ROAD BY SANDHURST BY SANDHURST ROAD ROAD

MASJID MASJID CHARNI BUNDER R S SOMATANE CHARNI BUNDER R S SOMATANE ROAD ROAD M M A A H H A CHHATRAPATI A CHHATRAPATI R SHIVAJI TERMINUS R SHIVAJI TERMINUS S S

H H

I I

CHURCHGATE CHURCHGATE JASAI R S JASAI R S CBD and off CBD

1,722–2,691 -9% -9% (160–250)

RASAYANI RASAYANI

URAN R S URAN R S

APTA R S APTA R S

Source: Knight Frank Research All maps are for representational purpose not to scale

113 INDIA REAL ESTATE - MUMBAI INDIA REAL ESTATE - MUMBAI

COVID could reverse the trend of shrinking apartment sizes in MMR

- NIBODH SHETTY CONSULTANT - RESEARCH

114 INDIA REAL ESTATE - MUMBAI

igh cost of apartments in the Mumbai Metropolitan Region (MMR) has been a major deterrent to residential sales growth in recent years. High land prices due to the land locked nature of the city and the high cost of construction premiums have Hensured that apartment prices continued to remain high despite the slowdown in sales in recent years. Developers tried to mitigate this by reducing the size of the apartment in order to bring down the ticket size and make it more affordable. Consequently, compact homes started becoming pervasive in MMR.

Over a 5-year period between 2014 and 2019, the apartment size in new launches has reduced by 25% at the MMR level. Homebuyers gravitated towards such compact homes as it fit within their affordability metrics and given the hectic pace of life in Mumbai, the time spent in the house had remained low.

The pandemic, however, has challenged this notion. The lockdown has forced school/college and office activities to come within the boundaries of the house, alongside regular household activities. Compact homes and the joint family culture in India have added chaos to this arrangement. This has made families come to recognize the need for additional rooms in the house.

The lockdown has made study rooms, half bedrooms and balconies an important part of the apartment, as they can be used for the purpose of work from home or study from home. As per our research, developers have taken note of this trend and started reconfiguring new launches to have larger rooms or additional bedrooms. Adding a study room or a balcony does not add significantly to the final cost of the apartment, but dramatically improves the marketability of the apartment in the current situation. If we refer to Table 1 below, the size of apartments in new launches post July were larger by 5% and 10% in the markets of Navi Mumbai and Peripheral Central Suburbs respectively, as compared to those launched in 2019.

Table 1: Average size of apartments in new launches

2014 2019 Shrinkage H2 2020 Increase Micro-market (in sq. ft.) (in sq. ft.) (2014-19) (in sq ft) (2019-H2 2020)

Navi Mumbai 857 685 -20% 722 5%

Peripheral Central Suburbs 768 611 -24% 671 10%

It is important to note that the planning of a project and designing of the layout of apartments is done several months before the project is formally launched. Hence, this trend is not very discernible now and is limited to two markets. However, it is likely to accelerate in the near future across most markets in MMR.

115 INDIAINDIA REAL REAL ESTATE ESTATE - NCR INDIA REAL ESTATE

NCR RESIDENTIAL AND OFFICE MARKET

116 INDIA REAL ESTATE - NCR INDIA REAL ESTATE - NCR

Mudassir Zaidi Executive Director - North

he second half of the year saw a decent recovery in both the option still being offered to their employees. Most organizations will residential and the office leasing sectors. The residential wait for the availability of vaccine and inoculation before allowing Tsector saw interventions from the RBI and Central the majority of employees to start coming in to the office. government on the regulatory side, as well as initiatives from developers to push sales. Buyers reciprocated positively as there was The effect on the co-working sector was also stark during the a convergence of multiple favorable factors. lockdown period. However, many are now taking up space in co- working set ups to tide over short term requirements as corporates do A significant increase in buying of ready to move inventory, near not want to take a long term call on their real estate take up. to completion inventory and plots were seen in the NCR market. Though the buyer has started taking decisions, he is still very risk Gurgaon has been able to recover its market share to some extent as averse at present. A perceptional trust deficit is playing on the buyer compared to the first half of the year. However, requirement of cost- psyche, and therefore, developers having a better track record are effective real estate has led to Noida maintaining a sizeable share as being considered currently. The emergence of plots as a favored type compared to long term average space take up. of purchase, even though it requires upfront payment, is evidence of the risk averse mindset of the buyer. The emergence of data centers as a major opportunity especially in the Noida / Greater Noida region has fired up the office sector. Developers came up with innovative schemes to sell products, Multiple DC operators are scouting for land for constructing build including some who were ready to consider existing inventory to suit facilities due to comparatively better power availability, holdings of prospective buyers. However, the Haryana RERA’s reasonable land cost and better infrastructure. However, the limitation on brokerage of 1% on new homes has created a challenge introduction of a policy for data centers by the governments will help for pushing sales. Brokers were used to getting any where between 2% in further development of the same. to 5% in the Gurgaon and Faridabad markets of Haryana. Warehousing as an opportunity continues to be in demand both New launches are not being preferred as the region is already reeling by developers as well as lessees in NCR. The pandemic has helped under substantial unsold inventory and developers prefer to offload E-commerce players to increase their market share and take up more existing stock. Most developers feel that the buying activity will warehousing space to service their requirements. Flipkart announced last till the end of the festive season or at the most till the end of the an acquisition of 140 acres of land and will build a 2+ mn sq ft facility first quarter of the new year, and a sustainable recovery can only as their north India hub for distribution. In-city warehouses are also take place when the economy starts performing better and the job gaining traction and the Delhi market is seeing attention from 3PL scenario improves. and e-commerce players.

The Office leasing sector is beginning to come out of the effects of Retail in the NCR region is still grappling with the effects of the the COVID crisis. The lockdown from April to June in H1 2020 had pandemic. Footfalls have improved during weekends however, they put the brakes on decision making as corporates took time to assess are nowhere near the pre-CoVID levels. Most malls are trying to the situation and take a call on their real estate strategy. Once the attract footfalls through discounts and some decent footfalls were lockdown ended, some corporates started to put their real estate observed during the festive season. However, the increase in CoVID strategy into practice. However, the lack of substantial activity has positive cases after the Dussehra and Diwali period again acted as a certainly shown up in the numbers, as many corporates are putting dampener. space take up decisions on hold, with the Work from Home (WFH)

117 INDIA REAL ESTATE - NCR

NCR Residential Market

NCR MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 CHANGE (YOY) H2 2020 Q4 2020 CHANGE (YOY) CHANGE (QOQ)

Launches 9,824 -57% 8,402 -44% 4,292 4% (housing units)

Sales 21,234 -50% 15,788 -31% 9,641 57% (housing units)

Price 45,822/ sq m -4% - - - - (wt avg)* (4,257/ sq ft)

Unsold inventory 1,10,674 -9% - - - - (housing units)*

Quarters to sell* 13.8 - - - - -

Age of unsold inventory 23.5 - - - - - (in quarters)*

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Sales (housing units) 5,446 - 6,147 9,641

Sales as % of 2019 Quarterly average 51% - 57% 90%

Launches (housing units) 1,422 - 4,110 4,292

Launches as % of 2019 Quarterly average 25% - 72% 75%

Source: Knight Frank Research

118 INDIA REAL ESTATE - NCR INDIA REAL ESTATE - NCR

• During 2018 and 2019, the National Capital Region (NCR) in NCR’s new residential supply has been steadily inching up recorded an increase in the number of residential units sold on since 2018. From 16% of the total in 2018, it has inched up to 19% a sequential basis. However, the upward momentum in sales in 2020, despite the Covid crisis. This is largely due to developers growth was derailed as the Covid-19 induced lockdown in H1 2020 trying to capitalize on the latent demand in locations such as disrupted the market dynamics. Only to reset them and revive Raj Nagar Extension, Siddhartha Vihar and Mohan Nagar where demand in H2 2020. With the phase wise unlocking in the second affordable and mid-segment products have been receiving good half of the year, serious homebuyers are back in the market response from buyers. hunting for deals. • In 2020, the weighted average residential prices in NCR corrected • In 2020, 21,234 units were sold in NCR’s primary residential by 4% over 2019. Developers continued to sweeten the deal for market. While this represents a 50% decline over 2019, sales homebuyers by offering freebies such as gold coins, luxury car, started picking up momentum from Q3 2020. This is largely waiver of maintenance for a few months and compensation due to pent-up demand during the lockdown converting into in case of delay in project delivery to win buyers’ trust and sales bookings for developers, as site visits resumed in the lock in deals in these challenging times. After the Covid-19 second half of the year. In Q3 2020, sales had recovered to 57% outbreak, some developers have also started offering innovative of 2019’s quarterly average, which further increased to 90% in schemes such as property swaps or property exchange to allow Q4 2020 indicating a strong demand comeback. The surprise homebuyers to swap a unit in a stalled project for another piece of sales recovery in the last quarter of 2020 was on the back of the property that is finished or nearly finished. festive season, families looking for bigger homes and risk-averse homebuyers taking advantage of historically low home loan • While both sales and launches remained historically low in the interest rates in the new normal. wake of the pandemic, cheaper home loans, lower pricing and pent-up demand led to a faster recovery in sales leading to a • In 2020, Greater Noida accounted for 39% of the total residential decline in unsold inventory by 9% annually over 2019. In H2 2020, sales followed by Gurugram at 29%. These two cities continued NCR’s unsold inventory stood at 1,10,674 residential units. to account for the maximum absorption of new residential units, much like the trends seen in the pre-Covid period. Ghaziabad • Despite a correction in unsold inventory, the quarters-to-sell comprised 16% of the residential sales whilst Noida accounted (QTS) inched up from 11.7 in 2019 to 13.8 in 2020. This was mainly for 14% of the same. The remaining 2% came from Delhi and because of a dip in sales velocity during the pandemic. QTS is Faridabad. the number of quarters required to exhaust the existing unsold inventory in the market. The existing unsold inventory is divided • In H2 2020, nearly 58% of total sales belonged to the category by the average sales velocity of the preceding eight quarters to of ticket sizes greater than INR 5 mn. There hasn’t been much arrive at the QTS number for the current quarter. A lower QTS divergence in this trend when compared to the H1 2020 or H2 indicates a healthier market. 2019 period. • The disruptions caused by the Covid-19 pandemic has made • In 2020, 9,824 residential units were launched across NCR, the homebuyers reassess their preferences with regard to home lowest in the past 11 years. Due to the lockdown in H1 2020, purchases. Homebuyers are placing their trust only in projects developers refrained from introducing new residential supply from developers with a strong brand equity and good record of in the market, which caused the annual launches to decline by project delivery despite volatile market cycles. In the new normal, 57% YoY. However, just like the trend witnessed with sales, new enquiries for bigger homes to accommodate work from home and launches improved in H2 2020, mainly due to a steady recovery in online classes have been going up. both Q3 2020 and Q4 2020. In Q3 2020, new residential launches recovered to 72% of 2019’s quarterly average strengthening to 75% • The Special Window for Affordable and Mid Income Housing of the same in Q4 2020. (SWAMIH) Investment Fund I has approved funding for housing projects in need of last mile funding. As part of this funding, 6 of • In line with past trends, Gurugram continued to account for the the 18 projects that have received final clearance are in the NCR lion’s share of new launches in 2020. It comprised 47% of the region; disbursement is currently awaited. This is a positive step total, followed by Greater Noida at 20%, Ghaziabad at 19%, Noida by the government to help with completion of stressed residential at 11% and Faridabad at 3%. Interestingly, the share of Ghaziabad projects.

119 INDIA REAL ESTATE - NCR

GURUGRAM other parts of Noida and Greater Noida.

• Gurugram continues to be a key location for new residential • In 2020, Noida and Greater Noida absorbed more than 50% of the supply in 2020. Despite a tumultuous period, it accounted for 47% total residential units in NCR. While sales velocity remained low, of the total residential launches in this year. Grade A developers optimism is returning slowly in this market for ready to move in who focused primarily on the luxury segment earlier have inventory with a price tag of < INR 5 mn. With no random walk recognised the opportunity in these challenging times to embark ins and window shoppers, developers have unleashed a slew of on diversifying their portfolio to mid-income housing. Sector seasonal discounts and freebies to attract homebuyers and beat 19, 24, 36 as well as New Gurugram remained favourite locations the Covid blues. for new projects such as independent floors and apartment complexes. • With projects such as the New Film City, the upcoming Jewar International Airport and a Data Centre Park in the pipeline, • In terms of residential sales, Gurugram accounted for 29% of total employment opportunities will also increase acting as an anchor sales in NCR in 2020. However, in comparison to 2019, there was a for the Noida, Greater Noida and Yamuna Expressway belt in the YoY decline of 18% largely due to an activity standstill in Q2 2020. long-term and revive end-user sentiment.

• With a change in market dynamics due to Covid-19, Gurugram is slowly transforming into a real estate market with offerings for all income segments. In 2021, we expect demand for low-rise housing societies, mid-income housing and plotted developments to intensify once normalcy returns.

NOIDA AND GREATER NOIDA

• In 2020, nearly one-third of total residential launches in NCR were attributed to Noida and Greater Noida. Locations such as Sector 16B, Tech Zone – IV and sectors along the Noida-Greater Noida Expressway and Yamuna Expressway witnessed new supply infusion in the form of apartment projects in affordable and mid-segment categories. However, due to the Covid outbreak, there has been a sharp decline of 69% YoY in new launches in

In NCR, end-users are also inclined towards plotted developments as they offer easy possession compared to under construction projects. Many established developers are foraying into plotted development schemes with vigour and have recently launched them in locations such Noida, Noida Extension, New Gurugram and Dwarka Expressway. Independent plots as well as plots in established townships are both becoming popular in the new normal, a trend which is here to stay.

120 INDIA REAL ESTATE - NCR INDIA REAL ESTATE - NCR

NCR RESIDENTIAL MARKET

Launches Sales Wt avg price (INR/sq m)

25000 48000

20000 47000 % annual9 decline in unsold inventory

15000 46000 m INR/sq in 2020 No. of units No.

10000 45000

5000 44000

0 43000 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

NCR AFFORDABLE MARKET ACTIVITY (UPTO INR 5 mn segment)

14,000

12,000

10,000

8,000

6,000 No. of units No. 4,000 The disruptions caused

2,000 by the Covid-19 pandemic has made homebuyers 0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 reassess their preferences Source: Knight Frank Research with regard to home purchases. Homebuyers TICKET SIZE SPLIT OF SALES are placing their trust

< INR 5 mn > INR 5 mn only in projects from developers with a strong H2 2020 58% 42% brand equity and good H2 2019 55% 45% record of project delivery

Source: Knight Frank Research

121 INDIA REAL ESTATE - NCR INDIA REAL ESTATE - NCR

SIWAL SIWAL Residential Launches and Sales

Launches Sales % Change KHARKHODA (housing units) (housing units) (YOY) KHARKHODA

NARELA NARELA

AUCHANDI AUCHANDI

ROHINI ROHINI

AZADPUR AZADPUR

BAHADURGARH ASHOK VIHAR SHAHDARA BAHADURGARH ASHOK VIHAR SHAHDARA Ghaziabad

1,733 -46% 1,873 -52% SAHIBABAD GHAZIABAD SAHIBABAD GHAZIABAD

CHANDNI 2,427 -33% 2020 3,382 -50% CHANDNI CHOWK H2 2020 CHOWK

CONNAUGHT PLACE CONNAUGHT PLACE

JANAKPURI JANAKPURI DelhiINDIA INDIA NAJAFGARH GATE MAYUR VIHAR NAJAFGARH GATE MAYUR VIHAR

DELHI - - - - DELHI CANTONMENT CANTONMENT

DWARKA 154 9% 2020 217 -30% DWARKA H2 2020

BADLI BADLI OKHLA OKHLA

DHANSA Noida DHANSA GREATER GREATER HAUZ KHAS KAILASH HAUZ KHAS KAILASH 636 -51% 1,096 -78% NOIDA NOIDA

KAPASHERA 1,973 -25% 2020 2,981 -47% KAPASHERA H2 2020

Greater Noida GREATER NOIDA GREATER NOIDA 1,974 -49% 1,974 -61%

PARI PARI Gurugram 6,327 -53% 2020 8,212 -63%CHOWK CHOWK H2 2020 FARUKH GURGAON FARUKH GURGAON NAGAR NAGAR 3,767 -33% RAJIV CHOWK4,589 -42% RAJIV CHOWK

4,676 65% 2020 6,132 -18% H2 2020

FARIDABAD FARIDABAD

IMT MANESAR IMT MANESAR

Faridabad

292 -24% 292 -24% DANKAUR DANKAUR BALLABHGARH BALLABHGARH 231 53% 2020 310 -14% H2 2020

Source: Knight Frank Research All maps are for representational purpose not to scale Note: “-” represents no change over the past period due to lack of activity.

122 INDIA REAL ESTATE - NCR

SIWAL SIWAL Residential Unsold Inventory

Unsold inventory QTS (in Age of inventory (housing units) YoY change quarters) (in quarters) KHARKHODA KHARKHODA

NARELA NARELA

AUCHANDI AUCHANDI

ROHINI ROHINI

AZADPUR AZADPUR

BAHADURGARH ASHOK VIHAR SHAHDARA BAHADURGARH ASHOK VIHAR SHAHDARA Ghaziabad

17.0 SAHIBABAD GHAZIABAD SAHIBABAD 21,604GHAZIABAD CHANDNI CHANDNI CHOWK CHOWK -7% 21.2 Delhi H2 2020

CONNAUGHT PLACE CONNAUGHT PLACE 1,585 24.2

JANAKPURI JANAKPURI -12% 14.4 H2 2020 INDIA INDIA NAJAFGARH GATE MAYUR VIHAR NAJAFGARH GATE MAYUR VIHAR

DELHI DELHI CANTONMENT CANTONMENT

DWARKA DWARKA

BADLI BADLI OKHLA OKHLA

DHANSA DHANSA Noida GREATER GREATER HAUZ KHAS KAILASH HAUZ KHAS KAILASH 16.1 NOIDA NOIDA 17,222

KAPASHERA KAPASHERA -10% 26.9 H2 2020

GREATER NOIDA GreaterGREATER Noida NOIDA

Gurugram 44,038 11.5 PARI PARI CHOWK CHOWK

FARUKH GURGAON FARUKH GURGAON 23,753 13.9 -12% 25.8 NAGAR RAJIV CHOWK NAGAR RAJIV CHOWK H2 2020 -6% 20.5 H2 2020

Faridabad

FARIDABAD FARIDABAD2,472 29.5

-1% 26.8 H2 2020

IMT MANESAR IMT MANESAR

DANKAUR DANKAUR BALLABHGARH BALLABHGARH

Source: Knight Frank Research All maps are for representational purpose not to scale Note: “-” represents no change over the past period due to lack of activity.

123 INDIA REAL ESTATE - NCR INDIA REAL ESTATE - NCR

Residential Pricing

Price range in H2 2020 6 month Micro Market Location 12 month Change in INR/sq m (INR/sq ft) Change

Dwarka 67,813–96,876 (6,300–9,000) -1% -1% Delhi Greater Kailash II 236,808–389,657 (22,000–36,200) 0% 0%

Sector 82 33,368–37,674 (3,100–3,500) -2% -2% Faridabad Sector 88 33,368–36,597 (3,100–3,400) 0% 0%

NH-24 Bypass 30,656–31,808 (2,848–2,955) 0% 0% Ghaziabad Raj Nagar Extension 31,216–35,812 (2,900–3,327) 0% 0%

Sector 1 35,683–38,750 (3,315–3,600) 0% 0% Greater Noida Omicron I 32,238–33,368 (2,995–3,100) 0% 0%

Sector 77 54,896–64,423 (5,100–5,985) 0% 0% Gurugram Sector 81 53,820–61,613 (5,300–5,724) 0% 0%

Sector 78 49,407–58,233 (4,590–5,410) 0% 0% Noida Sector 143 45,833–50,591 (4,258–4,700) -2% -2%

Source: Knight Frank Research

124 INDIA REAL ESTATE - NCR

NCR Office Market

NCR MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

New completions 0.27 (2.9) -76% 0.20 (2.1) -67% 0.14 (1.5) 153% mn sq m (mn sq ft)

Transactions 0.43 (4.7) -46% 0.24 (2.6) -46% 0.16 (1.7) 90% mn sq m (mn sq ft)

Weighted average transacted rental INR/sq 884.8 (82.2) -4% - - - 1% m/month (INR/sq ft/month)*

Stock mn sq m (mn sq ft)* 15.3 (169.2) 2% - - - -

Vacancy (%)* 16.3% - - - - -

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Transactions mn sq m (mn sq ft) 0.19 (2.0) 0.004 (0.04) 0.08 (0.9) 0.16 (1.7)

Transactions as % of 2019 Quarterly average 95% 2% 41% 79%

New completions mn sq m (mn sq ft) 0.03 (0.3) 0.04 (0.5) 0.06 (0.6) 0.14 (1.5)

New Completions as % of 2019 Quarterly 11% 15% 20% 50% average

Source: Knight Frank Research

• In 2020, 0.43 mn sq m (4.7 mn sq ft) of gross leasing was captured in this asset class amidst cautious decision-making by occupiers. in NCR. Whilst this represents a 46% annual decline over 2019, the National Capital Region (NCR)’s office market witnessed • The office space demand comeback has reflected visibly in H2 the prevalence of positive occupier sentiment in H2 2020. The 2020 numbers. Gross leasing of 0.24 mn sq m (2.6 mn sq ft) in H2 pandemic outbreak had led to a sharp fall in the leasing activities 2020 is 24% higher than the levels witnessed in H1 2020, when in NCR, the maximum brunt of which was borne in Q2 2020 when the pandemic had disrupted the demand dynamics and derailed the lockdown was imposed. Gross leasing revived to 41% of 2019’s decision making by occupiers. quarterly average in Q3, and eventually rose to 79% in Q4 2020. The gradual return to normalcy has paved the way for a recovery • In keeping with past trends, Gurugram and Noida continued

125 INDIA REAL ESTATE - NCR INDIA REAL ESTATE - NCR

to dominate the overall leasing in H2 2020 with a 45% and 43% • Co-working operators took up spaces selectively across NCR in H2 share respectively. Secondary Business District (SBD) of Delhi 2020. From a 3% share in H1 2020’s total leasing, it increased to and Central Business District (CBD) of Delhi accounted for the 12% in H2 2020. Co-working operators established office foot- remaining 10% and 2% share. print in Delhi in locations such as Okhla and Defence Colony. In Gurugram, it was Udyog Vihar, Qutub Plaza and Sector-45 that • In H2 2020, Gurugram recorded total leasing of 0.11 mn sq m (1.15 attracted co-working players. The manufacturing sector consti- mn sq ft), registering a 56% YoY decline over H2 2019 levels. While tuted the remaining 11% of the leasing activity in H2 2020. occupiers are leasing office spaces in Gurugram continually, many are also relocating within Gurugram to locations offering • With the resumption of economic activities and occupiers re- cheaper rents to sustain operations. Relocation from prime office thinking their strategies for office spaces, the deal count in NCR hubs of Gurugram to Udyog Vihar, Golf Course Extension Road increased from 66 in H1 2020 to 104 in H2 2020. The deal volume and Sohna Road has been rampant in this half yearly period. increased due to 77% of the total deals in H2 2020 being in the Apart from Grade A, many Grade B office spaces which awaited smaller deal size bracket of upto 2,322 sq m (25,000 sq ft). How- tenants, are receiving a lot of occupier interest in the new normal. ever, in terms of area leased, the average deal size shrunk by 41% YoY to 2,301 sq m (24,765 sq ft) in H2 2020. • New supply of premium office assets and cheaper rentals in comparison to Delhi and Gurugram’s prime business districts has • Due to the large-scale supply infusion in 2019, new office supply increased occupier demand for office spaces in Noida. At 0.10 mn remained limited in 2020. In H2 2020, 0.20 mn sq m (2.1 mn sq ft) sq m (1.1 mn sq ft), Noida recorded a much lower decline of 32% new office spaces came on the block in NCR. Due to the pandem- YoY in leasing in H2 2020 when compared to Gurugram. ic, 71% of 2020’s new supply infusion spilled over to the second half of the year. The pandemic and the abrupt lockdown led to • In the wake of the pandemic, the trend of diversifying across deferment of scheduled building completions in H1 2020 to later multiple small offices is also emerging in NCR. Delhi’s SBD has periods as construction sites across the region were closed for witnessed a sharp jump in leasing with a 116% YoY increase over almost two months. 73% of the total new supply in H2 2020 was H2 2019. Locations such as Mohan Cooperative, Okhla, Aeroci- concentrated in Gurugram, followed by Noida (21%) and SBD ty and Jasola attracted a lot of occupier interest from BFSI and Delhi (6%). co-working sectors. • Revisions in real estate space requirements have led to a 4% YoY • In H2 2020 period, the IT/ITeS sector accounted for 44% of the correction in weighted average rents in 2020. With a double-digit total office spaces leased. A 27% annual increase over the H2 2019 vacancy of 16.3% in NCR, tenants will have an advantage in the period was witnessed due to some large-sized deals. Most of the near term when they revisit real estate strategies. IT/ITeS sector occupiers took up space in Noida and select locations in Gurugram such as Sohna Road, Udyog Vihar and Gwal • Limited gross leasing of 0.19 mn sq m, (2.1 mn sq ft) was recorded Pahari. in NCR in H1 2020 as decision making at corporate occupiers’ end had come to an abrupt halt. However, the scenario is changing • The Other Services sector accounted for 20% of the total leasing now. In Q4 2020, a 90% Quarter-on-Quarter (QoQ) improvement in H2 2020 and largely comprised space take-up by companies in in leasing was noted. However, commercial real estate occupiers the consulting, fintech, telecommunications and media seg- are treading through some very uncertain times and relooking at ments. More than 50% of such spaces leased were concentrated flexible office space solutions for their short term office across Gurugram. requirements.

• The Banking, Financial Services and Insurance (BFSI) sector constituted 13% of the total leasing in H2 2020. Apart from Delhi’s CBD and SBD, locations such as Nehru Place, Aerocity and Jasola, occupiers also preferred Noida and Golf Course Extension in Gurugram.

126 INDIA REAL ESTATE - NCR

NCR OFFICE MARKET

Completions Transactions

0.7

0.6

% 0.5 annual2 increase in stock in 2020 over 2019 0.4

0.3 mn sq m

0.2

0.1

0.0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

NCR OFFICE MARKET VACANCY

Vacancy

18%

17%

16%

In the wake of the 15% pandemic, the trend of diversifying across 14% H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 multiple small offices is Source: Knight Frank Research also emerging in NCR. Delhi’s SBD has witnessed a sharp jump in leasing with a 116% YoY increase over H2 2019.

127 INDIA REAL ESTATE - NCR INDIA REAL ESTATE - NCR

BUSINESS DISTRICT CLASSIFICATION

Business district Micro-markets

CBD Delhi Connaught Place, Barakhamba Road, Kasturba Gandhi Marg and Minto Road

SBD Delhi Nehru Place, Saket, Jasola, Bhikaji Cama Place, Mohan Cooperative, Okhla and Aerocity

Gurugram Zone A M.G. Road, NH-8, Golf Course Road and Golf Course Extension Road

Gurugram Zone B DLF CyberCity, Sohna Road, Udyog Vihar and Gwal Pahari

Gurugram Zone C Manesar

Noida Sectors 16, 18, 62, 63 and the Noida–Greater Noida Expressway

Faridabad Sector Alpha, Beta, Gamma and Tech Zone

Source: Knight Frank Research

SECTOR-WISE SPLIT OF TRANSACTIONS

H2 2019 H2 2020

8% BFSI 13%

18% Information Technology 44%

27% Manufacturing 11%

23% Co-working 12%

24% Other Services 20%

Note: BFSI includes BFSI support services Source: Knight Frank Research

AVERAGE DEAL SIZE AND NUMBER OF DEALS

H2 2019 H2 2020 % 3,872sq m 2,301 79Q4 2020 transactions as a % of sq m (41,677) (24,765) 2019’s quarterly average sq ft sq ft 115 104 deals deals

Source: Knight Frank Research

128 INDIA REAL ESTATE - NCR INDIA REAL ESTATE - NCR

SIWAL Office Transactions

H2 2020 Transactions 2020 Transactions mn sq m (mn sq ft), YoY change mn sq m (mn sq ft), YoY change

KHARKHODA

NARELA

AUCHANDI

ROHINI

AZADPUR

BAHADURGARH ASHOK VIHAR SHAHDARA

CBD DELHI SAHIBABAD GHAZIABAD 0.004CHANDNI (0.05) 0.01 (0.1) CHOWK

-28% 2020 -46% H2 2020 CONNAUGHT PLACE

JANAKPURI INDIA NAJAFGARH GATE MAYUR VIHAR

DELHI CANTONMENT

DWARKA SBD DELHI

BADLI 0.02 (0.3) 0.03 (0.3) OKHLA

116% 2020 31% DHANSA H2 2020 GREATER HAUZ KHAS KAILASH Noida

0.10 (1.1) NOIDA0.20 (2.2)

KAPASHERA -32% 2020 -1% H2 2020

Greater Noida GREATER NOIDA - -

- 2020 - PARI

H2 2020 CHOWK

FARUKH GURGAON NAGAR RAJIV CHOWK

Gurugram

0.11 (1.2) 0.19 (2.1)

-56% 2020 -63% H2 2020 FARIDABAD

IMT MANESAR

DANKAUR BALLABHGARH

Source: Knight Frank Research All maps are for representational purpose not to scale Note: “-” represents no change over the past period due to lack of activity.

129 INDIA REAL ESTATE - NCR

SIWAL SIWAL Office Rental

Rental value range in H2 2020 in 12-month 6-month INR/sq m/month (INR/sq ft/month) change change

KHARKHODA KHARKHODA

NARELA NARELA

AUCHANDI AUCHANDI

ROHINI ROHINI

AZADPUR AZADPUR

BAHADURGARH ASHOK VIHAR SHAHDARA BAHADURGARH ASHOK VIHAR SHAHDARA

SAHIBABAD SAHIBABAD GHAZIABAD CBD Delhi GHAZIABAD CHANDNI CHANDNI CHOWK CHOWK 2,260–3,767 -1% -1% CONNAUGHT PLACE (210–350) CONNAUGHT PLACE

JANAKPURI JANAKPURI INDIA INDIA NAJAFGARH GATE MAYUR VIHAR NAJAFGARH GATE MAYUR VIHAR

DELHI DELHI CANTONMENT CANTONMENT

DWARKA DWARKA SBD Delhi

BADLI BADLI 807–2,153 0% -1% OKHLA (75–200) OKHLA

DHANSA DHANSA GREATER GREATER HAUZ KHAS KAILASH HAUZ KHAS KAILASH Noida

538–829 NOIDA -1%NOIDA-1% (50–77) KAPASHERA KAPASHERA

Gurugram Zone A

GREATER NOIDA 1,076–1,722 GREATER NOIDA -5% 0% (100–160)

PARI PARI CHOWK Gurugram Zone B CHOWK FARUKH GURGAON FARUKH GURGAON NAGAR NAGAR RAJIV CHOWK 861–1,453 RAJIV CHOWK -3% 0% (80–135)

Gurugram Zone C

269–377 0% 0% (25–35) FARIDABAD FARIDABAD Faridabad

484–592 0% 0% IMT MANESAR IMT MANESAR (45–55)

DANKAUR DANKAUR BALLABHGARH BALLABHGARH

Source: Knight Frank Research All maps are for representational purpose not to scale Note: “-” represents no change over the past period due to lack of activity.

130 INDIA REAL ESTATE - NCR INDIA REAL ESTATE - NCR

Developers in NCR adapting to altered consumer behavior in the new normal

- DIVYA GROVER, ASSISTANT VICE PRESIDENT – RESEARCH

020 has been a year like no other. The Covid-19 pandemic has couples, families – all categories of consumers are reevaluating altered consumer behavior permanently leading to a major their current living arrangements. Even the home-ownership averse 2structural shift in the manner they look at how to live, where millennial consumers are slowly realizing that investing in a hard to live and their sentiment towards home ownership. There is no asset like land or real estate should be a priority in case of more black going back to the old normal. Cocooned in the comfort of their homes swan events like these in future. during the rigorous lockdown in the early stage of the pandemic, led many in NCR to reevaluate their priorities and cherish the sense India’s stock exchange has witnessed some new highs in the past of security that comes with owning a home. Baby boomers, DINK couple of months. The market rally, led by hopes of coronavirus

131 INDIA REAL ESTATE - NCR

vaccine availability, has led many to book profits in the past couple buyers back to the table, as the lockdown lifted. of months. This enhanced liquidity in the hands of the consumer, is getting deployed in real estate. Coupled with low home loan interest Developers have also received good response from consumers rates, the risk-averse consumers of NCR are selectively investing in for plotted developments within township projects. Plotted residential products, especially in the well-connected locations of developments with basic infrastructure in Old Gurugram, New Gurugram and Noida. The lockdown has made space and stability in Gurugram, Dwarka Expressway, Sohna Road and Dharuhera have living arrangements the new buzzwords. In the new normal, the NCR seen a surge in demand due to the low gestation period. Many consumers’ wish list has well-ventilated houses, bigger spaces, bigger leading developers in the NCR region have recently launched plots in a well-developed location with good medical infrastructure plotted development schemes with average plot sizes in the range of as priority items. Developers in NCR have been astute to take heed of approximately 60-200 sq m (667- 2,250 sq ft) to attract buyers. Even this mindset shift and have started adapting to cash in on the pent-up larger plots with an average ticket size of INR 3.5 – 4.5 mn have been demand in the past few months. well received in the market as consumers have started preferring these products in the absence of residential options in the same price Getting innovative with product mix – Gurugram, Noida, Noida bracket in a location of their choice. Extension and Dwarka Expressway have witnessed a surge in demand for builder floors. A product, which was so far popular within Delhi’s Developers in NCR are not only adapting to the consumers’ product luxury property segment, is slowly making its presence felt in its preferences, they are making a major shift towards implementing counter magnets. While established locations had an abundant changes to the sales process. From aggressively tying up with local supply of builder floors, satellite cities had fewer options and it was brokers to creating integrated tech platforms, they are leaving no largely a Grade B developer play until now. A concept made popular stone unturned to get bookings. Some leading real estate portals by the redevelopment of old bungalows and independent houses have started outsourcing e-transaction platforms as a third- is now enticing buyers in the primary residential market after a party offering in recent times to boost their cash flows. Instead of leading developer in Gurugram recently test marketed such a product investing in building a tech platform, developers in NCR are buying which was lapped up by customers. Other leading developers are these technologies across the counter. This will help them create now shifting focus to this product instead of investing in township and deliver a seamless experience to consumers for shortlisting, projects. For a developer, it offers a low risk opportunity with a expression of interest and virtual walkthroughs. As buyers are back shorter working capital cycle. A few developers in NCR have already in the market now, developers are going the extra mile to keep them applied for RERA licenses to launch such products. Consumers are engaged digitally and market these new property types since builder also taking a keen interest in such products offered by pedigreed floors and plotted developments are here to stay. developers due to attractive payment plans and an interest in low-rise developments. The fact that builder floors can be constructed and handed over within 18-24 months has made buyers confident to close the deals. As NCR’s top localities with excellent social infrastructure, Gurugram and Noida attract a lot of families and second-generation buyers from Delhi. There is a growing acceptance of this property type amongst families that decide to move to the peripherals but want to maintain their lifestyle, if the property comes with good surrounding infrastructure. Since such a product was earlier not available in the primary market, people usually preferred an apartment in a township project in the city’s outskirts. However, after many property buyers burnt their fingers with projects still stuck in limbo, the introduction of such a property type in a 3 or a 4 BHK configuration has become the flavour of the season and brought the

132 INDIAINDIA REAL REAL ESTATE ESTATE - PUNE INDIA REAL ESTATE

PUNE RESIDENTIAL AND OFFICE MARKET

133 INDIA REAL ESTATE - PUNE INDIA REAL ESTATE - PUNE

Paramvir Singh Paul Branch Director - Pune

020 is likely to be one of the most challenging and uncertain sluggish. The extended lockdown in Maharashtra and restrictions years in recent history. No one ever imagined that the 21- on office space utilization has hindered demand and resulted in 2day national lockdown imposed from March 26th would further delays in companies restarting their offices. Office occupiers prolong to over 9 months in the form of partial lockdowns. However, are still evaluating their response to the ongoing pandemic and businesses across the board which had adversely been impacted by the employees continue to work from home. Having said that, the the pandemic induced lockdowns, have started reviving with gradual latest quarter has witnessed some resumption in leasing activity. phase wise unlocking. Co-working operators have also started taking up new spaces in anticipation on renewed growth prospects. The second half of 2020 started with a second lockdown in July for Pune. In that period, construction activity in real estate was hindered The pandemic has had a positive impact on the warehousing due to the acute labour shortage. It resumed in September with the segment. The warehousing space take up has witnessed renewed return of construction labour, starting around the end of August and growth due to increased demand from e-commerce and 3PL reaching full capacity only by October. segments.

Various stimulus measures announced by the Government and the The industrial demand has also received a boost due to the RBI have been crucial in aiding the revival of the real estate sector Government focus on ‘Atmanirbhar Bharat’. This vision of in Pune. The biggest contributor was the reduction in stamp duty promoting self-reliance through the Make in India initiative and rates. However, besides a reduction in stamp duty, residential sales advocacy of ‘Vocal for Local’ will aid early economic revival and in Pune in H2 2020 were stirred up by a plethora of factors including usher in a new cycle of economic growth for the nation. the reduction of home loan rates to a historic low, release of pent- up demand, fresh demand for upgrading to larger homes, and a The real estate sector has been dependent on China for the supply host of indirect/direct discounts offered by developers - all of them of key raw materials and products such as sanitary fittings, flooring culminating during the festive period of Navratra-Dussehra-Diwali. tiles, machinery, pipes, etc. The emphasis on reducing import and The sales momentum in recent months has been much higher than increasing domestic procurement will lead to a greater industrial last year giving a major relief to developers seeking to mitigate the demand for such products and higher topline for the Indian impact of the pandemic. companies, which in turn will lead to a fresh round of capex for building additional capacities and new employment generation. During the initial months of the lockdown, developers were cautious about taking decisions and used the moratorium period to The sentiments of the retail sector have been dampened by the consolidate their finances. As the optimism has now improved, we lockdown. Footfalls in malls have been low as several activities within are witnessing interest from developers to acquire new land parcels, the malls such as food court, entertainment zones, theatres, etc. and a few large land transactions have also concluded recently. The were allowed to restart much after the malls began operations. There MRTS push has sharpened focus on the Pimpri-Chinchwad region has been a churn in some of the malls and talks are going on about a and developers are taking up land positions there in anticipation change in the business model of large retail formats. The High Street of increased potential for real estate traction once the Metro Line 1 retail format has also been impacted by the pandemic with some becomes operational. of the larger stores giving up spaces or cutting down to smaller size formats. While other commercial segments have started to revive, we While the residential market has witnessed strong resurgence in anticipate slow revival in the retail segment which will be dictated by sales momentum, the recovery in commercial market has been containment of the pandemic and distribution of vaccines.

134 INDIA REAL ESTATE - PUNE

Pune Residential Market

PUNE MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

Launches 34,992 -22% 21,557 -7% 14,836 121% (housing units)

Sales 26,919 -18% 16,870 9% 11,952 143% (housing units)

Price 43,236 /sq m -5.3% - - - - (wt avg)* (4,017/sq ft)

Unsold inventory 47,542 20% - - - - (housing units)*

Quarters to sell* 6.4 - - - - -

Age of unsold inventory 13.5 - - - - - (in quarters)*

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Sales (housing units) 7,813 2,235 4,918 11,952

Sales as % of 2019 Quarterly average 95% 27% 60% 146%

Launches (housing units) 12,650 785 6,721 14,836

Launches as % of 2019 Quarterly average 113% 7% 60% 133%

Source: Knight Frank Research

• Pune has been amongst the worst affected cities in India by the average. The situation improved in Q3 2020, with sales and pandemic. The nationwide lockdown enforced on March 26, launches reaching 60% of 2019 quarterly average. It started to 2020 has extended over 9 months in the form of partial lockdown pick up in the last month of Q3, i.e. from September 2020 onwards in Pune till the end of 2020. The city had to go into a second after the announcement of a reduction in stamp duty rates by the lockdown in July after reopening partially in June due to a spike Maharashtra State Government. in cases. Offices are still not allowed to operate at full capacity. • To shield the real estate sector from the impact of pandemic • The lockdown had impacted real estate activity in Pune. Both induced lockdowns, the State Government announced reduction sales and launches in Q2 2020 were way below 2019 quarterly of stamp duty rates by 300 bps for a period of 3 months i.e. from

135 INDIA REAL ESTATE - PUNE INDIA REAL ESTATE - PUNE

September 1, 2020 till December 31, 2020 and by 200 bps from • In Q4 2020, markets in West Pune recorded the highest growth January 1, 2021 to March 31, 2021. YoY in sales at 63%, followed by East at 58%, North at 47%, with South and Central Pune recording a growth of 40% YoY each. • The reduction in stamp duty rates had the desired impact and invigorated homebuyer sentiments in Pune. Residential sales • Apart from absorbing the remaining incidence of stamp duty, started picking up from September onwards and jumped further many developers continued to offer indirect discounts such as in Q4 2020. Sales in Q4 2020 grew by 54% YoY and reached 146% deferred-payment plans, floor rise waivers, GST waiver, gifts, of 2019 quarterly average. The strong performance in Q4 2020 cashbacks, assured rental plans, etc. The weighted average made up for the tepid sales in Q3 2020 and helped half yearly prices were down 5.3% YoY during H2 2020. While these are the sales grow 9% YoY during H2 2020. reduction in quoted prices, the actual discounts offered during negotiations was higher. • A host of other factors such as the demand for an upgrade, increase in savings due to lockdown, festive period of Navratri- • Ready to move in apartments had been the mainstay of Dussehra-Diwali, reduction in home loan rates to historic lows homebuyers over the past few years, however, H2 2020 witnessed and direct/indirect discounts offered by developers dovetailed a revival of demand in the under-construction segments as with the stamp duty cut and helped stimulate the overall well. Several homebuyers who were looking to purchase an demand. apartment in the near future have opted for apartments in under-construction projects. Flexi payment plans and a greater • Households whose income streams were not affected during the choice of apartments along with a host of direct and indirect pandemic witnessed their savings go up due to the lockdown. discounts have helped lure this segment of homebuyers. This set A number of avenues for discretionary spends such as leisure, of homebuyers preferred to close the purchase during this period entertainment, vacation, domestic help, travel, fuel, shopping, and register their property in order to take advantage of the dining out, etc. were shut due to the lockdown and households lower stamp duty window. To make the most of this inclination ended up saving money which improved their ability to make of homebuyer preference for under-construction apartments, down payment for homes. developers launched several new projects in Q4 2020.

• The lockdown created an entirely new online universe where • Launches grew by 23% YoY in Q4 2020 but could not make up offices, schools and colleges came together within the boundaries for the fall in Q3 and were down 7% YoY during H2 2020. Both of the home. The joint family culture in India and regular annual launches and sales were down 22% YoY in 2020. As annual household activities added to the chaos. Due to the extended launches were greater than sales in 2020 due to the strong launch lockdown in Pune, families bore the brunt of this and realised momentum in Q1 and Q4, the unsold inventory went up to 47,542 the need for having additional rooms within their house. Thus, units and QTS increased to 6.4 quarters. an entirely new demand for upgrading to larger apartments was created during the lockdown which may not have been • If things had stayed the same as the previous year, the age of a necessity earlier. These homebuyers preferred to upgrade inventory would have increased by 4 quarters. However, the age during this period because of the lower stamp duty window. of inventory in 2020 increased by only 0.5 quarters, i.e. from 13 Consequently, the sale of apartments in the above INR 5 million quarters at the end of 2019 to 13.5 quarters at the end of 2020, category in Pune increased from 39% during H2 2019 to 51% which reflects the strong sales momentum in the Pune residential during H2 2020. market.

• During the lockdown, developers tried their best to revive • As more homebuyers are now looking to purchase larger residential sales and bring buyers back to the market. They apartments, developers have tried to reconfigure their new enhanced their digital marketing capabilities and stayed in launches by adding an additional room within the same layout or constant communication with potential buyers to do away with increasing the size of apartments. The average size of apartments the need for multiple sites visits. This helped bring down the in new launches increased across all micro-markets of Pune turnaround time. With only serious homebuyers stepping in for except one. At the city level, the average size of apartments in site visits during the pandemic, developers were able to clock new launches has increased from 71.8 sq m (773 sq ft) to 73.2 sq m higher conversion rates compared to pre-COVID times. (788 sq ft) in 2020. 33% of the new launches during H2 2020 were above INR 5 million ticket size compared to 14% during H2 2019.

136 INDIA REAL ESTATE - PUNE

PUNE RESIDENTIAL MARKET

Launches Sales Wt avg price (INR/sq m)

25000 49000

48000

20000 47000 % 46000 54YoY Jump in sales in Q4 2020

15000 m INR/sq 45000

No. of units No. 44000 10000

43000

42000 5000

41000

0 40000 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research

PUNE AFFORDABLE MARKET ACTIVITY (UPTO INR 5 million segment)

14,000

12,000

10,000

8,000

6,000 No. of units No.

4,000

2,000

0 In Q4 2020, markets in H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 West Pune recorded the highest growth YoY in TICKET SIZE SPLIT OF SALES sales at 63%, followed by

< INR 5 mn > INR 5 mn East at 58%, North at 47%, with South and Central H2 2020 49% 51% Pune recording a growth

H2 2019 61% 39% of 40% YoY each.

Source: Knight Frank Research

137 Kalbhor Kalbhor Nagar Nagar

Mohan Mohan Nagar Nagar Indira Nagar Indira Nagar

INDIA REAL ESTATE - PUNE INDIA REAL ESTATE - PUNE

Chinchwad Chinchwad Gaon Gaon

North Residential

3,688 37% 6,285 -5% Sukhwani Sukhwani Complex Launches and Sales Complex

2,933 -2% 2020 4,904 -26% H2 2020 Launches Sales % Change (housing units) (housing units) (YOY)

Wakad Wakad Hinjawadi Hinjawadi Hin Jawadi Hin Jawadi Lohegaon Lohegaon Rajiv Gandhi Rajiv Gandhi Infotech Park Infotech Park

Pimple Gurav Pimple Gurav

Bodkewadi Bodkewadi

Balewadi Balewadi Wagholi Wagholi

Mahalunge Mahalunge

Bhoirwadi West Bhoirwadi East

9,228 -4% 14,412 -19% Khadki Nagar 5,149 -10% 9,266 -11% Khadki Nagar

5,927 16% 2020 10,059 -5% 4,685 12% 2020 7,174 -13% H2 2020 H2 2020

Baner Baner Nande Nande

Pune Pune University University

Kharadi Kharadi

Sutarwadi Pashan Sutarwadi Pashan

Rajivgandhi Rajivgandhi Nagar Slum Nagar Slum Koregaon Park Vadban Koregaon Park Vadban

Central Koregaon Koregaon Clover Park Park Annexe Clover Park Park Annexe Shivajinagar View Shivajinagar View 177 -58% 321 -66% Revenue Ghorpadi Revenue Ghorpadi Colony Colony Juna Bazar Juna Bazar 261 -3% 2020 449 -24% H2 2020 Somnath Nagar Somnath Nagar lavale lavale Bhoiali Bhoiali

Deccan Deccan Gymkhana Gymkhana Budhwar Peth Budhwar Peth Bavdhan Bavdhan MICRO-MARKET CLASSIFICATION Camp Camp

Hadapsar Hadapsar Micro market LocationsKelewadi Kelewadi Navi Peth Navi Peth Chandani Chandani Chowk Kothrud Lohiya Nagar Chowk Kothrud Lohiya Nagar

Bhugaon Koregaon Park, Boat Club Road, Erandwane, Deccan,Swargate Kothrud, Model Bhugaon Swargate Central Colony

East Viman Nagar, Kharadi, Wagholi, Hadapsar, Dhanori

Wanwadi Wanwadi West Aundh, Baner, Wakad, Hinjewadi, Bavdhan, Pashan

North Pimpri, Chinchwad, Moshi, Chikhali, Chakan, Talegaon

South Kondhwa, Ambegaon, Undri, Dhayari, Warje, Sinhgad Road

South

Source: Knight Frank Research 3,315 -31% 4,708 -47%

Wadgaon 2020 Wadgaon Budruk 3,064 6% 4,333 -36% Budruk H2 2020 Fule Market Fule Market Nanded Nanded

Ahire Ahire Handewadi Handewadi

Source: Knight Frank Research All maps are for representational purpose not to scale

Divada Divada 138 Kalbhor Kalbhor Nagar Nagar

Mohan Mohan Nagar Nagar Indira Nagar Indira Nagar

INDIA REAL ESTATE - PUNE

Chinchwad Chinchwad Gaon Gaon Residential

Sukhwani Sukhwani Complex Complex Unsold Inventory

Unsold inventory QTS (in Age of inventory (housing units) YoY change quarters) (in quarters) North

9,900 6.8

Wakad Wakad 16% 13.9 H2 2020 Hinjawadi Hinjawadi Hin Jawadi Hin Jawadi Lohegaon Lohegaon Rajiv Gandhi Rajiv Gandhi Infotech Park Infotech Park

Pimple Gurav Pimple Gurav

Bodkewadi Bodkewadi

Balewadi Balewadi Wagholi Wagholi

Mahalunge Mahalunge

Bhoirwadi Bhoirwadi

Khadki Nagar Khadki Nagar

West Baner Baner Nande Nande East 15,691 6.1 Pune Pune University University 13,144 6.8 38% 10.7 Kharadi H2 2020 Kharadi 19% 15.8 H2 2020

Sutarwadi Pashan Sutarwadi Pashan

Rajivgandhi Rajivgandhi Nagar Slum Nagar Slum Koregaon Park Vadban Koregaon Park Vadban

Koregaon Central Koregaon Clover Park Park Annexe Clover Park Park Annexe Shivajinagar View Shivajinagar View 9.8 Revenue Ghorpadi Revenue 1,280 Ghorpadi Colony Colony Juna Bazar Juna Bazar -9% 16.7

Somnath Nagar H2 2020 Somnath Nagar lavale lavale Bhoiali Bhoiali

Deccan Deccan Gymkhana Gymkhana Budhwar Peth Budhwar Peth Bavdhan Bavdhan Camp Camp

Hadapsar Hadapsar Kelewadi Kelewadi Navi Peth Navi Peth Chandani Chandani Chowk Kothrud Lohiya Nagar Chowk Kothrud Lohiya Nagar

Bhugaon Swargate Bhugaon Swargate

Wanwadi Wanwadi

South Wadgaon Wadgaon Budruk Budruk 5.4 Fule Market Fule Market 7,527 Nanded Nanded 5% 14.4 Ahire Ahire Handewadi H2 2020 Handewadi

Source: Knight Frank Research All maps are for representational purpose not to scale

Divada Divada 139 INDIA REAL ESTATE - PUNE INDIA REAL ESTATE - PUNE

Residential Pricing

Price range in H2 2020 6 month Micro Market Location 12 month Change in INR/sq m (INR/sq ft) Change

Koregaon Park 139,932–182,988 (13,000–17,000) -5% -2%

Kothrud 80,730–139,932 (7,500–13,000) -6% -2% Central Erandwane 145,314–193,752 (13,500–18,000) -3% -3%

Boat Club Road 156,078–209,898 (14,500–19,500) -3% -2%

Kharadi 57,049–67,813 (5,300–6,300) -6% -1%

Wagholi 37,674–49,514 (3,500–4,600) -7% 0% East Dhanori 41,980–51,667 (3,900–4,800) -4% -1%

Hadapsar 49,514–64,584 (4,600–6,000) -6% -3%

Aundh 83,959–102,258 (7,800–9,500) -4% -2%

Baner 60,278–86,112 (5,600–8,000) -6% -1% West Hinjewadi 51,667–63,508 (4,800–5,900) -9% -2%

Wakad 58,126–66,737 (5,400–6,200) -3% -1%

Moshi 39,827–46,285 (3,700–4,300) -5% -3%

North Chikhali 37,674–44,132 (3,500–4,100) -8% -3%

Chakan 32,292–36,598 (3,000–3,400) -9% -3%

Ambegaon 47,362–59,202 (4,400–5,500) -5% -1%

South Undri 41,980–51,667 (3,900–4,800) -6% -1%

Kondhwa 49,514–61,355 (4,600–5,700) -6% -2%

140 INDIA REAL ESTATE - PUNE

Pune Office Market

PUNE MARKET SNAPSHOT

2020 H2 2020 Q4 2020 PARAMETER 2020 H2 2020 Q4 2020 CHANGE (YOY) CHANGE (YOY) CHANGE (QOQ)

Completions 0.07 (0.7) -83% 0.05 (0.5) -80% 0.05 (0.5) 100% mn sq m(mn sq ft)

Transactions 0.34 (3.7) -40% 0.16 (1.7) -30% 0.14 (1.5) 919% mn sq m (mn sq ft)

Weighted average transacted rental INR/sq 753.5 (70) -6% - - - -4.4% m/month (INR/sq ft/month)*

Stock mn sq m (mn sq ft)* 6.9 (73.7) 1.0% - - - -

Vacancy (%)* 5.9% - - - - -

Note – 1 square metre (sq m) = 10.764 square feet (sq ft) | *End of period number.

Source: Knight Frank Research

QUARTER SNAPSHOT

Q1 2020 Q2 2020 Q3 2020 Q4 2020

Transactions mn sq m (mn sq ft) 0.13 (1.4) 0.06 (0.6) 0.01 (0.1) 0.14 (1.5)

Transactions as % of 2019 Quarterly average 91% 38% 10% 99%

New completions mn sq m (mn sq ft) 0.02 (0.2) - - 0.05 (0.5)

New Completions as % of 2019 Quarterly 20% - - 49% average

Source: Knight Frank Research

• The leasing volumes in Pune office market were down 30% YoY months since March 26, 2020 and had to enter into a second during H2 2020 and completions were down 80% YoY during lockdown in July 2020 after partially reopening in June 2020. To the same period. While Q3 2020 was almost a washout, which ensure social distancing and to keep the COVID-19 pandemic in dragged the numbers for H2 2020 down, the situation started to check, authorities have capped the private sector office atten- revert to normal in Q4 2020. In Q4 2020, the transactions jumped dance capacity at 30% in Pune. This limitation of 30% has been 919% QoQ over Q3 2020 and reached 99% of 2019 quarterly aver- in force since September 1, 2020 and prior to that it was limited age. at 10% since June 2020. Due to these restrictions companies were forced to keep their employees on work-from-home (WFH) setup. • The city has been embroiled in the lockdown for over nine

141 INDIA REAL ESTATE - PUNE INDIA REAL ESTATE - PUNE

• In Pune, office demand has always been

driven predominantly by the Infor- PUNE MARKET SNAPSHOT mation Technology (IT) companies. Companies in these sectors have been Completions Transactions

operating on a WFH mode. Several IT 0.5 occupiers have put their expansion plans on hold till these restrictions on space utilisation are lifted. Thus, the share of 0.4 IT in overall transactions has dropped from 54% during H2 2019 to 11% during 0.3 H2 2020. Once the restrictions on office space utilisation are lifted, this demand is likely jump back. 0.2 mn sq m • Co-working operators are bullish about their business prospects and have been 0.1 actively taking up spaces in the second half of 2020. Co-working had the highest

share of transactions during H2 2020 and 0.0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 their share of transactions has grown

from 31% during H2 2019 to 42% during Source: Knight Frank Research H2 2020. The operators believe that once these limits of utilisation of office space are lifted, companies would avoid spending money on office capex due to PUNE OFFICE MARKET VACANCY business uncertainties and look at flex- Vacancy ible office spaces with renewed vigour, as it can be scaled up or scaled down as 12% required.

10% • Co-working operators made up for the 8% fall in demand from IT segments. Aided by the robust demand from co-working 6% operators, the city level quarterly transactions recovered from 10% of 2019 aver- 4% age in Q3 2020 to 99% of 2019 average in 2% Q4 2020, registering a phenomenal 919%

Quarter-on-Quarter (QoQ) growth in Q4 0% 2020. H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020

Source: Knight Frank Research • In 2020, the weighted average rent at the city level declined by 5.4% YoY. The rents have corrected between 3%-7% YoY construction labour and disrupted supply chains for construction materials. This im- across business districts in Pune during pacted the completion timeline of projects and the completions were lower by 83% YoY 2020. in 2020. Developers also went slow on project completions, as the demand environment was weak due to office space utilisation cap of 30%. Once the project receives Occupan- • The labour crisis induced by the pan- cy Certificate (OC), it will be subject to taxes and paying tax of unleased or marginally demic had caused acute shortage of leased projects is a huge strain on finances.

142 INDIA REAL ESTATE - PUNE

BUSINESS DISTRICT CLASSIFICATION

Business district Micro-markets

CBD and off CBD Bund Garden Road, S B Road, Camp, Deccan, University Road, Shankar Sheth Road

SBD East Kalyani Nagar, Yerwada, Nagar Road, Hadapsar

PBD East Kharadi, Phursungi, Wanowrie

SBD West Wakdewadi, Aundh, Baner, Kothrud, Balewadi

PBD West Hinjewadi, Bavdhan, Wakad

Source: Knight Frank Research

SECTOR-WISE SPLIT OF TRANSACTIONS

H2 2019 H2 2020

54% BFSI 11%

2% Information Technology 6%

4% Manufacturing 16%

31% Co-working 42%

10% Other Services 25%

Note: BFSI includes BFSI support services Source: Knight Frank Research

AVERAGE DEAL SIZE AND NUMBER OF DEALS

H2 2019 H2 2020 % 4,484sq m 4,918 919QoQ jump in transactions in Q4 sq m (48,262 ) (52,937 ) 2020 sq ft sq ft 50 32 deals deals

143 Kalbhor Nagar

Mohan Nagar Indira Nagar

INDIA REAL ESTATE - PUNE INDIA REAL ESTATE - PUNE

Chinchwad Gaon Office Transactions

H2 2020 Transactions 2020 Transactions mn sq m (mn sq ft), YoY change mn sq m (mn sq ft), YoY change Sukhwani Complex

PBD West

0.005 (0.05) 0.02 (0.2) Wakad 2020 Hinjawadi -58% -38% PBD East Hin Jawadi H2 2020 Lohegaon Rajiv Gandhi Infotech Park 0.08 (0.86) 0.15 (1.6)

375% 2020 135% Pimple Gurav H2 2020

Bodkewadi

Balewadi Wagholi

Mahalunge SBD East

Bhoirwadi 0.06 (0.62) 0.09 (1.0)

Khadki Nagar 50% 2020 -23% H2 2020

Baner Nande

SBD WestPune University 0.01 (0.14) 0.08 (0.8) Kharadi

-91% 2020 -77% H2 2020

Sutarwadi Pashan

Rajivgandhi Nagar Slum Koregaon Park Vadban

Koregaon CBD & Off-CBD Clover Park Park Annexe Shivajinagar View 0.002 (0.02) 0.004 (0.04) Revenue Ghorpadi Colony Juna Bazar -88% 2020 -79% H2 2020 Somnath Nagar lavale Bhoiali

Deccan Gymkhana Budhwar Peth Bavdhan Camp

Hadapsar Kelewadi Navi Peth Chandani Chowk Kothrud Lohiya Nagar

Bhugaon Swargate

Wanwadi

Wadgaon Budruk Fule Market Nanded

Ahire Handewadi Source: Knight Frank Research All maps are for representational purpose not to scale

Divada 144 Kalbhor Nagar Kalbhor Nagar Mohan Nagar Mohan Nagar Indira Nagar Indira Nagar

INDIA REAL ESTATE - PUNE

Chinchwad Gaon Chinchwad Gaon Office Rental

Sukhwani Rental value range in H2 2020 in 12-month Complex 6-month Sukhwani INR/sq m/month (INR/sq ft/month) change change Complex

PBD West

431-700 (40-70) -7% -4% Wakad Hinjawadi PBD East Wakad Hin Jawadi Lohegaon Rajiv Gandhi Hinjawadi Infotech Park Lohegaon Hin Jawadi 538–1,023 Rajiv Gandhi -5% -3% Infotech Park (50-100) Pimple Gurav Pimple Gurav Bodkewadi Bodkewadi

Balewadi Wagholi Balewadi Wagholi

Mahalunge SBD East Mahalunge Bhoirwadi 538-1,238 -3% -1% Bhoirwadi (50-115) Khadki Nagar Khadki Nagar

Baner Nande Baner Nande SBD WestPune University Pune University 538-969 -5% -3% Kharadi (50-90) Kharadi

Sutarwadi Pashan Sutarwadi Pashan Rajivgandhi Nagar Slum Rajivgandhi Koregaon Park Vadban Nagar Slum Koregaon Park Vadban Koregaon CBD & Off-CBD Clover Park Park Annexe Koregaon Shivajinagar View Clover Park Park Annexe Shivajinagar View Revenue 807-1,238 Ghorpadi Colony -5% -3% (75-115)Juna Bazar Revenue Ghorpadi Colony Juna Bazar Somnath Nagar lavale Somnath Nagar Bhoiali lavale Bhoiali

Deccan Gymkhana Deccan Budhwar Peth Gymkhana Budhwar Peth Bavdhan Bavdhan Camp Camp Hadapsar Kelewadi Hadapsar Navi Peth Chandani Kelewadi Chowk Kothrud Lohiya Nagar Navi Peth Chandani Chowk Kothrud Lohiya Nagar Bhugaon Swargate Bhugaon Swargate

Wanwadi Wanwadi

Wadgaon Budruk Wadgaon Budruk Fule Market Nanded Fule Market Nanded Ahire Handewadi Ahire Handewadi Source: Knight Frank Research All maps are for representational purpose not to scale

Divada Divada 145 INDIA REAL ESTATE - PUNE INDIA REAL ESTATE - PUNE

MRTS push can unlock PCMC’s real estate potential

- NIBODH SHETTY CONSULTANT - RESEARCH

une city has lacked a Mass Rapid Transport System (MRTS) construction. network along the lines of that which is available in major Pmetros of India like Mumbai or NCR. Due to poor MRTS The Metro Line 1 – Pimpri Chinchwad Municipal Corporation infrastructure, the vehicular density of the city has grown over the (PCMC) to Swargate - will be amongst the first metro lines in Pune years, putting a strain on the city’s road network, leading to traffic to become operational. Located towards the north of the city, the jams and increased air pollution levels. The tide is set to turn now as Pimpri-Chinchwad region was amongst the first industrial clusters to Pune has finally caught up with other metros of India in developing be developed by Maharashtra Industrial Development Corporation MRTS networks. The city’s MRTS infrastructure is set to get a (MIDC) in the 1960s. As the manufacturing industries in PCMC grew, major boost with the completion of 3 metro lines currently under affordable residential apartments started coming up in PCMC to cater

146 INDIA REAL ESTATE - PUNE

to the housing requirements of the blue collared workers. In those longer travel time from PCMC to office markets in the eastern and days, the office districts catering to the service sector were located in western parts of the city compared to the catchments in the east and the central part of Pune. west, the real estate demand in PCMC remained lower and PCMC continued to remain an affordable housing destination. While the The Information Technology (IT) boom in India increased demand overall demand for residences from service sector employees in for office spaces in Pune multifold. Due to the availability of private PCMC is low, a significant percentage of employees of fringe IT firms land parcels, along with better infrastructure development in the do reside in PCMC due to the affordable residential prices. Having east, the office districts started developing towards the eastern separate municipal corporations for PCMC and Pune city also led part of the city along the Nagar Road to cater to this new demand. to a difference in the level of infrastructure development. Although Later, with the Government’s focus on promoting IT corridors, local a few office spaces came up in the PCMC region as well, large office infrastructure development and the construction of Mumbai-Pune space occupiers still preferred the more developed business districts Expressway, office districts started developing towards the western located in the eastern and western parts of the city. Despite affordable part of the city. Proximity to business districts ensured real estate real estate prices, the lack of MRTS connectivity in Pune hindered development took place at a greater pace in the eastern and western real estate development in PCMC on the lines of that in the eastern parts of the city and residential prices in these catchments also and western parts of the city. However, things are set to change with appreciated. the upcoming Metro Line 1.

As the city expanded towards the north, MIDC developed new manufacturing clusters at Chakan and Talegaon and factories started shifting out of PCMC into these clusters. Due to greater distance and

Table 1: Metro Line 1 details

Pune Metro Line 1 : PCMC to Swargate

Length 16.59 km

Number of stations 14 stations (5 underground, 9 elevated)

PCMC, Sant Tukaram Nagar, Bhosari (N.F.), Kasarwadi, Phugewadi, Dapodi, Station names Bopodi, Khadki, Range Hill, Shivaji Nagar, Civil Court, Budhwar Peth, Mandai, Swargate

Tentative date of completion 2021

Metro Line 1 will bring MRTS connectivity into PCMC and connect it to the business districts in the central part of the city. Using an interchange for metro lines, the residents of PCMC will be able to travel all the way up to Kothurd or Viman Nagar through Metro Line 2 (Vanaz to Ramwadi) and up to Hinjewadi through Metro Line 3 (Hinjewadi to Civil court). PCMC will get connected to most office and residential catchments in the eastern and western parts of the city through the affordable MRTS network which will bring down peak hour travel time considerably compared to the existing road networks. This MRTS connectivity can usher in an entirely new phase of real estate development in the PCMC region. It will also aid commercial development within PCMC, as residents in other parts of the city can use the MRTS network to reach PCMC, thereby increasing its acceptability as a commercial business district. Many developers have acquired or are trying to acquire land parcels and erstwhile industrial estates in PCMC in anticipation of the change there MRTS can bring about.

There are talks of extending metro line 1 till Chakan which will further increase traction in this belt.

147 INDIA REAL ESTATE INDIA REAL ESTATE

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Piyali Dasgupta Associate Director - Corporate - Marketing & Public Relations [email protected]

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